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Assessing Regional Integration in Africa VI: Harmonizing Policies to Transform the Trading Environment

Report by UNECA, 2013

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This paper carries forward the momentum of January 2012’s Decision and Declaration on boosting intra-African trade and fast-tracking the establishment of a Continental Free Trade Area by 2017 by addressing the issue of harmonizing rules of origin and trade facilitation instruments to facilitate Continental Free Trade Area negotiations by member States. The report starts with a brief overview of progress in regional integration, followed by discussions on the harmonization of three key prerequisites to pave the way for a meaningful continental market—namely rules of origin, trade facilitation instruments and cross-border linkages for information and communications technology.

Assessing Regional Integration in Africa VI


Harmonizing Policies to Transform
the Trading Environment






Harmonizing Policies to
Transform the Trading


Environment
Assessing Regional Integration in Africa VI




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Harmonizing Policies to Transform the Trading Environment by the Economic
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© United Nations Economic Commission for Africa, 2013
Addis Ababa, Ethiopia
All rights reserved
First printing October 2013
Sales No.: 14.II.K.1
ISBN-13: 978-92-1-125121-0
e-ISBN-13: 978-92-1-054209-8
Material in this publication may be freely quoted or reprinted.
Acknowledgement is requested, together with a copy of the publication.


Content designed by Broadley Design




iii


Contents


Foreword v


Chapter 1: Introduction 1


Chapter 2: Overview of Regional Integration in Africa 3


Developments in key areas across the RECs 3
Developments at the inter-REC and continental levels 7
Mainstreaming regional integration nationally 9
Way forward 11


Chapter 3: Harmonizing Rules of Origin across Africa 13


Defining rules of origin 13
Rules of origin in selected African RECs 14
Rules of origin: Experiences and lessons from outside Africa 16
Harmonizing rules of origin to anchor the CFTA 17


Chapter 4: Harmonizing and Strengthening Trade Facilitation Measures and Programmes 23


Trade facilitation measures and programmes to underpin the CFTA 24
Lagging rail and port development, missing road links, mobilizing funds 34
One-stop border posts and border-post management systems 37
Conclusions and recommendations 40


Chapter 5: ICT for Regional Trade and Integration in Africa 43


The power of e-commerce 43
Trade facilitation 46
ICT, automation and trade facilitation in Africa 52
Opportunities and challenges 57
Conclusions and recommendations 58


Notes 63
References 65
Acronyms 71
Acknowledgements 73


Boxes


Box 2.1 Promoting free movement of Africans 4
Box 2.2 Best practices in eliminating tariff and non-tariff barriers 7
Box 2.3 PIDA’s expected benefits 8
Box 2.4 AMV 9
Box 2.5 Mainstreaming regional integration: The Rwandan experience 11




iv


Box 3.1 RECs’ rules of origin 14
Box 4.1 Trade facilitation—definition and benefits 23
Box 4.2 The Revised Kyoto Convention 24
Box 4.3 Douala–N’djamena corridor services resume 34
Box 4.4 Zambian government “grabs” assets 35
Box 5.1 EU approaches 44
Box 5.2 Shoppers.co.ke 45
Box 5.3 The Association of Southeast Asian Nations Single Window 48
Box 5.4 DHL Global Connectedness Index 48
Box 5.5 Emulating Mauritius 51
Box 5.6 Case study on the Kilindini Waterfront Automated Terminal Operating System 53
Box 5.7 Case studies on NSWs in Ghana and Mozambique 54
Box 5.8 The Trans-Kalahari Corridor e-customs and e-trade pilot project 56
Box 5.9 Senegal’s electronic cargo tracking system 56
Box 5.10 Summary conclusions and general recommendations 59


Figures


Figure 2.1 National institutional arrangements for regional integration 10
Figure 2.2 Coordination between ministries responsible for regional integration and the private sector 10
Figure 3.1 Steps for negotiating harmonized rules of origin 19
Figure 3.2 Accelerating the consolidation of RECs to facilitate continental rules of origin 21
Figure 4.1 Impact of Chirundu OSBP 37
Figure 4.2 OSBPs built on the border 38
Figure 4.3 OSBPs built in each territory 38
Figure 4.4 OSBPs at the common border 39
Figure 4.5 OSBPs on the territory of member States 39
Figure 5.1 Africa’s mobile revolution, 2000–2011 46
Figure 5.2 Breakdown of WTO-type trade facilitation provisions in RTAs 49
Figure 5.3 ICT and trade: The supporting environment 58


Tables


Table 4.1 Ratification or accession by African states to key international conventions 25
Table 4.2 Ratification or accession by African states to international conventions recommended
in various REC treaties 26
Table 4.3 Ratification or accession by UMA countries to international agreements adopted
under the auspices of UNECE, as of 30 December 2011 27
Table 4.4 Technical standards for vehicles in different RECs 30
Table 4.5 Main corridors in Africa 32
Table 4.6 Transport corridors with permanent secretariats 33
Table 4.7 Development corridors in SADC 33
Table 4.8 Checkpoints, delays and bribes along three ECOWAS corridors 34
Table 4.9 TAH missing link indicators, 2008 36
Table 5.1 Development corridors in SADC 55




v


More than ever there is now a sense of strong political commitment giving impetus to regional
integration in Africa. As countries continue pursuing programmes and activities to accelerate
regional integration and cooperation arrangements inspired by the Abuja Treaty, they are
making steady progress towards creating an African Economic Community.


The Tripartite Initiative among the members of the Common Market for Eastern and Southern
Africa, the East African Community and the Southern African Development Community
alone seeks to create a single free trade area that brings together 26 African countries
with a combined gross domestic product of more than US$630 billion and more than half
a billion people. The Decision and Declaration of the African Union Assembly of Heads of
State and Government in January 2012 on boosting intra-African trade and fast-tracking the
establishment of a Continental Free Trade Area by 2017 has also set an important foundation
for the renaissance of pan-Africanism.


These are among several recent examples of the bold steps Africa’s political leaders have taken
to strengthen the benefits from regional arrangements through market enlargement and other
efforts to promote production at scale as well as competitiveness. These efforts are needed to
boost intraregional trade, lessen Africa’s heavy external dependence and enhance its resilience
to global shocks.


The road to completely dismantling barriers to trade is strewn with obstacles, however, and
requires a thorough understanding of regional integration and trade policies. For example,
harmonized rules of origin and a trade facilitation environment across the continent would
greatly improve the means and cost of doing business across borders. Tangible progress is seen
in one-stop border posts in some member States under initiatives led by regional economic
communities. The Tripartite and Continental Free Trade Area initiatives and associated decisions
compel persevering efforts to establish a harmonized and seamless trading environment across
the continent—working for the transformation of Africa.


In support of progress towards regional integration in Africa, the Economic Commission for
Africa, African Union Commission and African Development Bank jointly produce Assessing
Regional Integration in Africa (ARIA). The first issue (ARIA I), published in 2004, provided a
comprehensive assessment of the status of regional integration in Africa, with subsequent
editions focusing on thematic areas. Thus ARIA II examined rationalization of regional economic
communities and their overlapping memberships. ARIA III addressed macroeconomic
policy convergence, as well as monetary and financial integration in the regional economic
communities. ARIA IV focused on enhancing intra-African trade. ARIA V provided analytical
research and empirical evidence to support the establishment of the Continental Free Trade
Area and the benefits that African countries stand to gain from it.


Foreword




vi


ARIA VI, “Harmonizing Policies to Transform the Trading Environment,” carries forward the
momentum of January 2012’s Decision and Declaration by addressing the issue of harmonizing
rules of origin and trade facilitation instruments to facilitate Continental Free Trade Area
negotiations by member States. The report starts with a brief overview of progress in regional
integration, followed by discussions on the harmonization of three key prerequisites to pave the
way for a meaningful continental market—namely rules of origin, trade facilitation instruments
and cross-border linkages for information and communications technology.


It is our sincere hope that ARIA VI provides policy guidance to member States in their eventual
negotiations on the rules of origin and ancillary trade facilitation instruments to kick start the
continental market.


Carlos Lopes
UN Under Secretary General and Executive Secretary
Economic Commission for Africa


Nkosazana Clarice Dlamini Zuma
Chairperson
African Union Commission


Donald Kaberuka
President
African Development Bank




1


African countries continue to pursue programmes and
activities aimed at accelerating regional integration and
cooperation arrangements on the continent. Regional
integration has been part of the major agendas of African
leaders in line with the objectives of the Treaty Establishing
the African Economic Community, also known as the Abuja
Treaty, promulgated in 1991 and in force in 1994. The
ultimate objective of the Abuja Treaty is the formation of an
African Economic Community.1


Regional integration in Africa therefore continues to hold
a central place in the continent’s endeavours to achieve
economic transformation and attain sustainable socio-
economic development. Africa has put in place functional
regional economic communities (RECs) as building blocks
for establishing the African Economic Community. The
impetus for Africa’s regional integration is reinforced by
the Constitutive Act of the African Union (AU). And the
momentum to accelerate the process is manifested by the
Tripartite Initiative among the members of the Common
Market for Eastern and Southern Africa (COMESA), the
East African Community (EAC) and the Southern African
Development Community (SADC) to create a common
free trade area (FTA), which will bring together 26 African
countries with a combined gross domestic product (GDP)
of more than US$630 billion, and by the subsequent
decision and declaration of the AU Assembly of Heads
of State and Government in January 2012 on boosting
intra-African trade and fast-tracking the establishment of a
Continental Free Trade Area (CFTA) by an indicative date of
2017 (AU, 2012). Production at scale, competitiveness and
intraregional trade are expected to be boosted through


these initiatives and thus help strengthen Africa’s resilience
to global economic and financial shocks.


But a single market cannot function optimally and
seamlessly with different rules of origin and trade policy
instruments. For the enlarged African market to be fully
effective, it should be accompanied by harmonization
of rules of origin and the trade facilitation environment
in general. RECs invariably focus on developing and
implementing their own rules of origin and trade
facilitation schemes, but they are also conscious of the
need to harmonize their efforts given their overlapping
memberships, which is one reason they promote inter-REC
projects such as one-stop border posts. The COMESA–
EAC–SADC FTA and the CFTA initiatives also compel RECs
to harmonize their trade liberalization programmes and
instruments.


This publication is organized as follows. After this
introduction, chapter 2—a recurrent part of the
Assessing Regional Integration in Africa (ARIA)
series—provides an overview of progress in regional
integration. Chapter 3 discusses rules of origin among
the RECs and makes recommendations on negotiating
principles to harmonize them in the context of the
CFTA. Chapter 4 analyses and makes proposals to
harmonize trade facilitation instruments in areas such
as customs clearance and transit regulations. Chapter
5 addresses automation and linkages in information
and communications technology (ICT) that should
underpin cross-border trade with an integrated border
management system.


Chapter 1
Introduction






3


This chapter highlights developments in Africa’s regional
integration efforts in key areas across the RECs and
broadly at the continental level. These include efforts
towards continental market integration through the
Tripartite FTA initiative involving COMESA, EAC and
SADC, and more broadly through the AU Summit
Decision to fast-track a CFTA; the Minimum Integration
Programme (MIP); the Programme for Infrastructure
Development in Africa (PIDA); continental financial
institutions; the African Charter on Statistics; the Africa
Mining Vision (AMV); the African common position
on migration; and peace and security. The chapter
concludes with a discussion on mainstreaming regional
integration at the national level, which is an important
catalyst for achieving Africa’s regional integration.


Developments in key areas across
the RECs


Free movement of people and right
of establishment


The free movement of people is a critical component of
regional integration and could greatly affect millions of
Africans. REC member States have adopted protocols
bilaterally and regionally on the free movement of people,
right of residence and right of establishment, and taken
them to varying stages of implementation. For instance,
the Economic Community of West African States (ECOWAS)
and EAC are implementing common passports for travel,
which could eventually replace the current system of
national passports.


A few RECs have made strides to eliminate visa
requirements, and countries still implement policies to
remove entry visas bilaterally (box 2.1). Although African
countries have taken appreciable steps to facilitate short-
term stays for African citizens within the framework of the
programmes of the RECs, visa restrictions still prevail in a
number of countries, due to security and other concerns.
Thus it may be easier for goods than people to move freely
between countries.


Progress to liberalize rights of residence and establishment
is also generally slow, due mainly to inadequate
transposition of existing protocols into national law. A range
of services are still closed to (or heavily restricted for) non-
nationals in some countries, including telecommunications
and hospitality. Non-nationals are sometimes not allowed to
trade outside large cities. There are different requirements
for the registration of foreign businesses and the
recognition of relevant education qualifications obtained in
other member States, as well as strict entry requirements in
medicine and law.


Back in 2001 the Assembly of Heads of State and
Government agreed to create a strategic framework for
a migration policy in Africa. The framework required
countries to address the challenges posed by migration
and ensure the integration of migration and related issues
into national and regional agendas for security, stability,
development and cooperation; to work towards the
free movement of people; to strengthen intraregional
cooperation on migration issues; and to create a
conducive environment for migrants and the Diaspora to
participate in development. Moreover, a Common African
Position on Migration and Development was adopted at
the AU Summit in 2006, followed by the AU Convention
for the Protection and Assistance of Internally Displaced
Persons in Africa in 2009, known as the Kampala
Convention. The former aims to combat illegal migration
through effective border controls, while ensuring the
humanitarian obligation to protect and provide security
for legal migrants and avoiding encroachment on the free
movement of people.


Member States should ensure the fulfilment of their
commitments to these supplementary continental
positions and instruments on migration and the free
movement of people.


Macroeconomic policy convergence


RECs are making progress in implementing their monetary
cooperation programmes. COMESA has established the
regional payment system to facilitate intraregional trade


Chapter 2
Overview of Regional Integration
in Africa




4


using local currencies. It is also working on a Multilateral
Fiscal Surveillance Framework, a Financial System
Development and Stability Plan, and an Assessment
Framework for Financial System Stability. The COMESA
monetary cooperation programme is run through
its monetary institute, established in 2011 in Nairobi,
Kenya. Preparations for the EAC Monetary Union are also
advanced in terms of protocol negotiations and a review of
macroeconomic convergence criteria. ECOWAS has plans
to launch a second monetary zone by 2015 and a larger
monetary zone by merging it with the CFA zone by 2020,
while the SADC is assisting its member States in formulating
their macroeconomic convergence programmes in the
context of the Finance and Investment Protocol.


Physical integration


Infrastructure is key to advancing Africa’s integration
agenda, supporting economic growth, reducing poverty
and achieving the Millennium Development Goals.
Africa’s prospects for transformation will be brightened by
investments in infrastructure, as now discussed.


Roads


Major projects on improving the road network include
the completion of the missing links of the Trans-African
Highway (TAH), which entail various projects of road
construction, rehabilitation and extension, such as the
Bamenda–Enugu Transport Facilitation Programme.
Financially supported by the African Development Bank
(AfDB), the World Bank and the Japan International
Cooperation Agency, once completed it can boost
trade between West and Central African countries and
strengthen their economic cooperation. Pre-feasibility
studies of the missing links have been completed on
the Dakar–N’djamena–Djibouti and Djibouti–Libreville
transport corridors with funding from the NEPAD
Infrastructure Project Preparation Facility (NEPAD-IPPF).
Feasibility studies are being carried out for the Tripoli–
Windhoek and the Beira–Lobito transhighways and the
bridge linking The Gambia to Senegal.


The Economic Commission for Africa (ECA) with the African
Union Commission (AUC) has completed a study on the
regional norms and institutional framework to foster the
development of the various trans-African highways, which
was reviewed by an expert group meeting in September
2011 in Addis Ababa. The meeting proposed an Action
Plan, which was adopted by the African Ministers of
Transport and subsequently endorsed by the AU Assembly
of Heads of State and Government held in Addis Ababa
in January 2012. An intergovernmental agreement
for the development of trans-African highways and its


Box 2.1


Promoting free movement of Africans


• COMESA is granting a 90-day visa on arrival to all
citizens of its member States who are members of
the FTA under Protocol CM/XI/60.


• ECOWAS is granting a visa on arrival to all citizens
of its member States under Protocol A/P/.1/5/79
on the free movement of people and the right of
establishment.


• The ECOWAS regional passport is a further
boost to the free movement of people. ECOWAS
countries are now converting their national
passports to the ECOWAS passport, which has
the ECOWAS emblem on the front cover. Benin,
Ghana, Guinea, Liberia, Niger, Nigeria and
Senegal have already changed their passports to
conform to the ECOWAS version.


• Some SADC member States are granting a 90-day
visa-free stay to citizens of other member States
through bilateral agreements.


• In addition to removing all visa requirements to
its citizens, all member States in EAC are granting
a three-month visa-free stay for national passport
holders and six months for EAC passport holders.
The passport is valid for five years and is recognized
by all member States.


• Some EAC countries, such as Kenya, Rwanda and
Uganda, have a bilateral agreement to allow their
citizens to freely establish themselves in the other
EAC countries. The agreement also waives all work
permit fees.


• Rwanda has revised its immigration policy and now
issues visas on arrival to all African citizens.


• In a June 2013 meeting the Council of Ministers
of the Central African Economic and Monetary
Community (CEMAC) decided that from January
2014 citizens of the community will be free to
move across borders without visas for 90 days
with a national identity card or a passport and that
during their stay they will be entitled to the same
rights as nationals of the country of visit, except for
political rights.


Source: Best Practices on Regional Integration
in Africa (2013).




5


annexes (highway network routes, classification and
design standards, harmonization of safety, social and
environmental norms and standards) is in preparation and
will be submitted to the third session of the Conference of
the African Ministers of Transport in November 2013. The
signing and roll-out of this agreement will be a tremendous
step towards physically integrating the continent.


To take care of the current and increasing road
infrastructure assets through proper maintenance and
management, COMESA countries have reformed road
sector management and funding. Several countries
have set up road funds and road development agencies
to maintain regional and national road networks,
including the Democratic Republic of Congo (DRC),
Djibouti, Ethiopia, Kenya, Malawi, Rwanda, Sudan,
Uganda, Zambia and Zimbabwe. The main source of
funding for road maintenance is the fuel levy while
construction and rehabilitation are funded through
government budgets, loans from development banks
and funds from partners.


SADC has taken great strides to deepen regional
integration following the approval of the Regional
Infrastructure Development Master Plan Vision 2027,
a 15-year blueprint that will guide cross-border
infrastructure projects during 2013–2027. The plan
will serve as a key strategic framework in an integrated
and co-coordinated manner in six sectors.2 Resources
will target the SADC Regional Development Fund,
member States, the private sector and development
partners. SADC is also implementing the Kazungula
Bridge Project, which lies on the North–South transport
corridor, a vital trade route serving major economies in
the region.3 The project is being implemented with
a loan from AfDB and the Japan International
Cooperation Agency.


ECOWAS has established national road transport
and transit facilitation committees in member States
composed of key public and private sector actors to
ensure the free flow of trade and transport along the
member States’ corridors. ECOWAS is coordinating an
AfDB-funded multi-national highway and transport
facilitation programme between Nigeria and Cameroon
(Bamenda–Enugu Road Corridor) and the construction
of three important bridges in Sierra Leone (Sewa, Waanje
and Moa). The commission is also facilitating the Abidjan–
Lagos Road Corridor through its Abidjan–Lagos Trade
and Transport Facilitation programme, which includes
rehabilitating road sections in Ghana, Benin and Togo.


In the Intergovernmental Authority on Development
(IGAD), various infrastructure projects are in progress,


including the Nairobi–Addis Ababa Corridor (Isiolo–
Moyale–Addis Ababa Road); Kampala–Juba Corridor
(Nimule–Juba under construction in South Sudan, Gulu–
Nimule under procurement in Uganda); and Berbera
Corridor (Somaliland–Ethiopia). EAC has identified five
main corridors within the community (a total length of
about 12,000 km), which constitute a strategic priority
and require rehabilitation and upgrading to complete
the Community’s road network.


The projects include feasibility studies and a detailed
design of the Arusha–Holili–Taveta Road, Malindi–Lunga
Lunga Road and Tanga–Bagamoyo Road; a scoping
study on the civil engineering contracting capacity in
East Africa; and a study on the East African transport
strategy, regional road sector development programme
and East African transport facilitation project. Progress
made in carrying out the Economic Community of
Central African States (ECCAS) Consensus Blueprint
on Transport in Central Africa and its priority projects
is related to the implementation of the Fougamou–
Doussala–Dolisie (Gabon–Congo) Highway project, the
development of the Ouesso–Sangmelima Road project
and the transport facilitation project on the Brazzaville–
Yaoundé Road Corridor.


In North Africa, the countries of the Arab Maghreb Union
(UMA) have in general a dense, diverse and constantly
developing road network, with norms and standards that
are essentially the same across countries. The network
embraces national and local roads linking major cities and
towns in countries and regional roads between them. The
UMA network of supranational roads—the M Network—
links UMA countries and these countries to Europe and
the rest of Africa. The network also services major ports,
airports and production facilities in UMA countries. To
complete the connection of the M Network and ensure a
better flow within the entire Maghreb region, a project is
afoot to connect Mauritania: Nouakchott–Nouadhibou,
Nouakchott–Attar and Zouirate–Attar, with a total length of
937 km. Construction of the Nouakchott–Nouadhibou and
Nouakchott–Attar sections is complete, and funding for the
rest is being sought.


Rail


Many of the new railway development projects under
way in Africa are based on the framework of the Union
of African Railways, which encourages standard gauge
railways. The networks planned for Eastern and Southern
Africa within the adopted corridor approach include a
rail link for Djibouti, Ethiopia, South Sudan and Sudan
originating from Djibouti and terminating in Juba; a
railway project linking Kenya, South Sudan and Ethiopia,




6


originating from Lamu Port and terminating in Juba with
a link to the Ethiopia–Djibouti Corridor through Moyale;
and the Kagera Basin Railway linking Tanzania, Rwanda
and Burundi and originating in Isaka. In addition, Ethiopia,
Djibouti and the five EAC countries have decided to
develop standard gauge rail networks to replace existing
narrow gauge systems. The main ECCAS regional rail
project is to extend the Leketi–Franceville Railway between
Gabon and Congo.


The Maghreb railway network has a length of 8,383 km,
of which 5,587 km are standard gauge, serving major
cities and ports of the region. The paucity of rail transport
in Libya and Mauritania (apart from a 652 km track from
Nouadhibou, mainly for minerals) has made it impossible
to link all UMA countries. There is an initiative to build a
high-speed train line connecting Casablanca, Algiers and
Tunis. The terms of reference for its preliminary feasibility
study, as well as the specifications, have been defined
by the ministerial committee responsible for specialized
infrastructure. Libya has a project to build a line from
Rasjedir (the border crossing with Tunisia) through Tripoli
to Mesrata.


Air


The EAC Civil Aviation Safety and Security Oversight
Agency has moved to permanent headquarters in
Entebbe, Uganda. ECOWAS is focusing on implementing
the Yamoussoukro Decision on air transport liberalization
by adopting community acts on establishing a common
air transport legal framework for ECOWAS member States.
All ECCAS member States are covered by projects within
the framework of the capacity-building programmes
of the oversight agency. The Code of Civil Aviation of
Central Africa was adopted by the ministers responsible
for civil aviation in Bujumbura on 11 June 2012. A draft
convention on the Maghreb open sky was finalized in
2009. During its 14th session in Nouakchott in March
2013, the UMA Council of Ministers of Transport decided
to review the project, taking into account the legal
and socio-economic developments over the last two
years in the region. UMA countries have also signed
two draft conventions, on air search and rescue and on
coordination and cooperation in aviation.


The Yamoussoukro Decision has increased air links among
many African countries (in particular capital cities) through
operations of major African airlines. Its implementation
was boosted by the decision of the third Conference of the
African Ministers of Air Transport in 2007 in Addis Ababa
to entrust to the African Civil Aviation Commission the role
of executing agency. Thus AUC set up in 2012 a steering
committee to promote and oversee harmonization of


competition rules, settlement disputes and the protection
of consumers’ rights. The committee is also in charge of
reviewing the commission’s structure and organization to
enable it to cope with its new mandate.


At the subregional level, ECCAS and ECOWAS are developing
joint regulatory texts modelled on existing COMESA–EAC–
SADC arrangements, which include joint implementation
bodies (COMESA Air Transport Regulatory Board and Joint
Competition Authority) set up to harmonize technical,
legal and institutional frameworks for accelerating the
implementation of the Yamoussoukro Decision.


Energy


COMESA has launched an initiative to promote regional
cooperation in energy development, trade and capacity
building and has developed a baseline renewable energy
database for the region. The Eastern Africa Power Pool has
adopted a 2025 strategic road map and regional market
design. A regional power master plan and grid code have
also been developed, and an independent regulatory
body has been set up. SADC is operationalizing the
Southern African Power Pool Inter-Utility Memorandum
of Understanding for sharing the costs and benefits of
energy generation. SADC member States are completing
their energy projects, and the SADC Secretariat has the
mandate to monitor power projects. The Secretariat has
been requested to facilitate the adoption of the power pool
plan to identify generation and transmission projects with
regional impact.


The East African Power Master Plan was completed in
May 2011 and approved by the EAC Sectoral Council on
Energy in June. The plan outlines the least-cost generation
and transmission programme for meeting the region’s
electricity demand for 2013–2038. It was drafted with an
Interconnection Code, which will govern the transmission
system’s design and operational requirements for regional
interconnection. 


The West African Power Pool continued efforts to
update the ECOWAS Master Plan for Production and
Distribution, which was adopted in November 2011.
The pool coordinated the actions undertaken in the
emergency programme for the cities of Bissau and
Conakry. The ECOWAS Regional Electricity Regulatory
Authority effectively entered its operational phase for
establishing a regional electricity market in January
2011.


ECCAS member States set up in April 2003 the Power
Pool of Central Africa, one of the main achievements of
which is progress toward the Grand Inga project.




7


Developments at the inter-REC
and continental levels


Efforts at broader inter-REC and continental
market integration


Work on setting up a Tripartite FTA has attracted
considerable attention in recent years. It entails initiatives
to harmonize policies and programmes of the three
RECs in trade, customs and infrastructure development.
The FTA is built on three main pillars—market
integration, infrastructure development and industrial
development—and will create a market of more than
527 million people in a major step towards realizing
the African Economic Community. The initiative also
aims to enhance trade facilitation to improve the flow
of goods along transport corridors by lowering transit
times and the cost of trading; promote joint planning and
implementation of infrastructure programmes (road, rail,
border infrastructure, and seaports, air transport, ICT and
energy); simplify rules of origin; relax restrictions on the
movement of business people; liberalize some priority
service sectors; promote value addition; and transform
the region into an information- and knowledge-based
economy.


Task teams are working on different clusters. The Tripartite
FTA is expected to improve intra-REC trade more. COMESA,
for instance, saw its intraregional trade grow from US$2
billion in 2000 to US$18 billion in 2012. EAC’s intraregional
exports increased from about US$500 million in 2000 to
more than US$2.4 billion in 2010.


The Tripartite FTA is a key stepping stone towards the CFTA
and thus the African Economic Community. At its 18th
Ordinary Session on 29–30 January 2012 in Addis Ababa,
on the theme “Boosting Intra-African Trade,” the Assembly
of Heads of State and Government of the AU adopted
a decision and a declaration that reflected the strong
political commitment of African leaders to accelerate and
deepen the continent’s market integration (AU, 2012). The
Heads of State and Government agreed on a roadmap for
establishing the CFTA by the indicative date of 2017. During
its 19th Ordinary Session, the assembly adopted a decision
that highlighted the gains from the CFTA for intra-African
trade, particularly through the High-Level African Trade
Committee and the consultations of the Committee of
Seven Heads of State and Government, which addresses
the challenges of intra-African trade, infrastructure and
productive capacities.


Box 2.2 highlights some of the strides made in trade and
market integration.


MIP


MIP is a strategic framework to accelerate programmes
and activities of the RECs to boost continental
integration. It was developed by the AUC with the RECs
on the basis of a study by the AUC in 2009. The concept
of MIP was adopted by the African ministers in charge
of regional integration at their fourth Conference at
Yaoundé, Cameroon, in May 2009. The AUC and the RECs
were requested to work out practical modalities for the
MIP Action Plan. The AUC was also requested to review
the costs of implementing the activities and projects
of the MIP Action Plan, which it estimates at US$111
million. Since the MIP Action Plan was adopted, the
AUC has worked with the United Nations Development
Programme (UNDP) to develop a mobilization strategy
for the plan and to set up an integration fund. The
two institutions are also making efforts to provide
assistance for:


Box 2.2


Best practices in eliminating tariff
and non-tariff barriers


• Elimination of tariffs in EAC member States is in
full force. The duty- and quota-free trade regime
is based on the principles of the World Trade
Organization and has helped to bolster trade
in the region to more than US$3 billion in 2010,
a 10.6 per cent increase from 2009.1


• The EAC Customs Union Protocol was modelled
on the COMESA Protocol. EAC is a zero-tariff zone
(from 2010). COMESA is also a zero-tariff zone, and
of its US$3 billion regional trade,2 US$2.6 billion is
within the FTA.3


• Non-tariff barriers are being eliminated with the
help of an online reporting scheme for COMESA,
EAC and SADC. The Non-tariff Barrier Reporting
and Monitoring Mechanism is designed to enable
private and public operators to register complaints,
which can then be resolved bilaterally. To date, 329
complaints have been registered, of which 227
(69 per cent) have been resolved.


Notes:
1. EAC (2011a).
2. COMSTAT (n.d.).
3. COMESA FTA participants are Burundi, Comoros, DRC,
Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Libya,
Rwanda, Seychelles, Sudan, Zambia and Zimbabwe. Ethiopia,
Eritrea, Swaziland and Uganda are not participants.
Source: Best Practices on Regional Integration in
Africa (2013).




8


• A resource mobilization strategy for current and future
MIP Action Plans.


• Technical assistance in drafting a feasibility study on
an integration fund.


• The mobilization of catalytic resources within UNDP
regional programme portfolios and strategic initiatives
to support future MIP Action Plans.


PIDA


PIDA, which was adopted by the Heads of State and
Government in 2010, contains a framework for meeting
infrastructure demand up to 2040 (2020 for ICT). It has
components addressing projected infrastructure gaps
and bottlenecks based on supply and demand forecasts,
institutional deficiencies and options for identifying,
preparing and funding projects. PIDA is organized on the
basis of short- and medium-term targets running up to
2020 and 2030, as well as long-term projections to meet
demand up to 2040. Short-term projects and programmes
are in a Priority Action Plan, for which the capital cost over
2012–2020 is estimated at US$68 billion (about US$7.5
billion annually over the nine years). Mobilizing these funds
is a huge challenge.


The following are critical factors in PIDA’s success: finance
and investment with the majority of funds mobilized in
Africa; preparation of bankable projects to target external
financiers and investors; strong local ownership; shared
solidarity and responsibilities; and capacity of RECs to
spearhead implementation. The expected benefits are
in box 2.3.


Continental financial institutions


In line with the Abuja Treaty, the Heads of State and
Government of the AU approved the hosting of the African
Investment Bank, the African Monetary Fund and the
African Central Bank, by Libya, Cameroon and Nigeria,
respectively. The status is as follows.


African Investment Bank. The Memorandum of
Understanding between the AU and the host country
was signed on 6 January 2008. The AUC has recruited the
Technical Committee to carry out a study on establishing
the Bank. It has also recruited support staff for the
committee. The draft protocol and statute was finalized and
adopted by the Heads of State and Government at the AU
Summit of January–February 2009. Efforts are under way to
get it signed and ratified, but to date only Libya has done so.


African Monetary Fund. Work on establishing the African
Monetary Fund is ongoing. The Memorandum of
Understanding between the AU and the host country was
signed in June 2008, and a draft protocol and statute has
been signed.


African Central Bank. Progress has been slow since the
signing of the Memorandum of Understanding between
the AU and the host country in April 2009.


AMV


AMV—a transparent, equitable and optimal exploitation
of mineral resources to underpin broad-based sustainable
growth and socio-economic development—was adopted
by the Heads of State and Government at the February
2009 AU Summit following the October 2008 meeting
of African ministers responsible for mineral resources
development (AU, 2009a). AMV is a strategic document on
the vital role that mining and minerals can play in helping
Africa achieve its development goals. It is most likely that
the booming mining sector in Africa will need more skilled
human resources (it is short of them) and that AMV will
play a critical role in providing them (box 2.4).


AMV will provide technical advice to member States
to improve their mineral-resource policies; establish
appropriate institutional, legal and regulatory


Box 2.3


PIDA’s expected benefits


• Growth in Africa’s global competitiveness, including
in agriculture and manufacturing.


• Growth in Africa’s share of world trade, to at least
twice today’s 2 per cent.


• Creation of up to 15 million new jobs through
construction, operation and maintenance of PIDA
projects. Millions more will be created indirectly
through these projects’ economic activity.


• A doubling of intra-African trade shares from the
current 11–12 per cent.


• The securing of water resources and basins for
future generations.


• Access to electricity for more than 800 million
people.


Source: http://www.afdb.org/en/news-and-events/article/
programme-for-infrastructure-development-in-africa-to-be-
key-feature-of-au-summit-8781/.




9


frameworks; and invest in the human resources, research
and development, and geological and geophysical data
that are critical for efficient and effective management
of mineral resources. An African Mineral Skills Initiative
has been launched to support AMV and has partnered
with a gold-mining company, AngloGold Ashanti, and
ECA. There are plans to integrate the Initiative into the
African Mineral Development Centre, which was set up
in 2013.


Peace and security


African countries are keen to tackle African conflicts,
but serious threats remain in parts of the continent that
require joint effort and funding from Africa and the rest of
the world. A number of African countries, regional bodies
and pan-African institutions are intensifying peace and
security operations under the African Peace and Security
Architecture. Initiatives include the Peace and Security
Council, a 15,000-troop African Standby Force, a Special
Peace Fund, a Panel of the Wise and a Continental Early
Warning System.


Under the umbrella of the AU, African governments have
adopted other common positions on peace and security,
such as the Prevention and Combat of Terrorism; the
Control of Illicit Proliferation, Circulation and Trafficking of
Small Arms and Light Weapons; the Prevention and Control
of Organized Transnational Crime; and the Protection of
and Assistance to Internally Displaced People.


Development partners are delivering their commitments
in peace building through providing training and supplies
to peace-keeping forces; building capacities of African
institutions; and providing financial support to enhance
operations of these institutions.


Individual partners are providing technical and financial
support to some operational programmes of the AU, such
as the AU Mission in Somalia, and the United Nations
Mission in South Sudan. There has been a series of trans-
border crimes in some regions in West Africa, and the
Gulf of Guinea in particular, which have hurt economic
growth and sustainable development there. Initiatives
in response include a Memorandum of Understanding
by ECOWAS and ECCAS to explore possibilities to
combat piracy, armed robbery and other illicit activities
committed at sea.


Mainstreaming regional
integration nationally
Regional integration initiatives require a large degree of
public management and implementation at the national
level. Without an absolute commitment at the national
level, there can be little progress at the subregional
level. Doing nothing or too little to implement agreed
programmes can severely hamper the integration agenda.
The RECs—the building blocks of the African integration
agenda—are only as strong as their members. If member
States proclaim a strong political commitment for
integration, they should demonstrate it nationally through
serious measures and programmes to implement—and be
seen to be implementing—the RECs’ decisions.


Box 2.4


AMV


AMV comprises:


• A knowledge-driven African mining sector that
catalyses and contributes to the broad-based
growth and development of, and that is fully
integrated into, a single African vision.


• A sustainable and well-governed mining sector
that effectively garners and deploys resource rents
and that is safe, healthy, gender- and ethnically
inclusive, environmentally friendly, socially
responsible and appreciated by surrounding
communities.


• A mining sector that has become a key component
of a diversified, vibrant and globally competitive
industrializing African economy.


• A mining sector that has helped establish a
competitive African infrastructure platform,
through the maximization of its propulsive local
and regional economic linkages.


• A mining sector that optimizes and husbands
Africa’s finite mineral resource endowments and
that is diversified, incorporating both high-value
metals and lower value industrial minerals at both
commercial and small-scale levels.


• A mining sector that harnesses the potential of
artisanal and small-scale mining to stimulate
local and national entrepreneurship, improve
livelihoods and advance integrated rural social and
economic development.


• A mining sector that is a major player in vibrant
and competitive national, continental and global
capital and commodity markets.


Source: AU (2009a).




10


Member States are expected to ensure coordination
between the objectives and instruments of regional
integration and national economic policy making—and
to speedily ratify and implement decisions, agreed
protocols and instruments. Member States also have
other obligations, such as completing transport links
attributed to the country as part of cross-border physical
networks, adhering to convergence parameters of
sound macroeconomic policy, and encouraging or
institutionalizing parliamentary and public debate on
integration nationally. Thus they should develop a coherent
national strategy to ensure that all groups—civil society,
the private sector, political parties, parliamentarians, and
immigration and customs officials—are fully consulted
and participate in formulating and implementing regional
integration policies.


These and other key responsibilities of member States will
ensure the initiatives’ success. They are not always fulfilled,
however, due largely to capacity deficits and resource
constraints. Against this backdrop, the rest of this section
provides some findings from a 2012 ECA survey.


National institutional arrangements
to support mainstreaming


National coordination of regional integration
programmes and activities remains a major challenge
for many African countries. Even though each
country has a designated ministry, department or
unit in charge of regional integration (figure 2.1),


0 5 10 15


Per cent


20 25 30 35 40


Ministry of Finance and Economic Development Planning


Ministry of Foreign Aairs and International Cooperation


Ministry of Regional Integration


Ministry of Trade and Industry


Ministry of Infrastructure and Transport


Figure 2.1


National institutional arrangements for regional integration


Source: ECA (2012b).


Figure 2.2


Coordination between ministries responsible for
regional integration and the private sector


Very strong


Strong


Weak


11%




37%


52%


Source: ECA (2012).


coordination mechanisms between that ministry
and other stakeholders are inadequate (figure 2.2).
Communication gaps in the flow of information
between ministries and other stakeholders underlines
the need for strengthening multi-stakeholder
participation. Member States also lack the human




11


resources to coordinate implementation between
that ministry and other stakeholders. Hence the AU
has enjoined its members to strengthen national
mechanisms, including ministries in charge of regional
integration, for coordinating and advancing integration.


Regional integration activities and programmes
require the collective participation of all stakeholders
(governments, civil society, private sector, academia,
the diaspora) supported by development partners.
According to the ECA survey, the private sector is little
involved in some key areas (see figure 2.2).


What needs to be done at the continental,
regional and national levels?


A mainstreaming framework at all levels is needed
to accelerate regional integration, with five stages:
formulation of decisions on regional integration;
consultations among key ministries and stakeholders;
domestication of agreed protocols into national
plans; allocation of resources and implementation
of programmes; and monitoring and evaluation of
progress (ECA, 2012b).


The AU and the RECs remain the major bodies for the
formulation and adoption of decisions on regional
integration. Beyond formulation, some decisions and
protocols need to be approved at the national level
(either through parliament or through other established
ratification processes) before being fully adopted,
because some of them require the legitimization and
buy-in of representatives of parliaments and other
authorities. The framework on mainstreaming will
also assist in enhancing coordination and consultation
among line ministries in implementing key decisions,
including those on regional integration. There is also a
need to form a special committee among key ministries,
including private sector representatives, that will meet
regularly to review progress and address bottlenecks.


The framework should include a special committee
reporting to the minister in charge of regional
integration or to the focal ministry. The framework
should develop strong links between the responsible
ministries and the Ministry of Finance in preparing the
budget to ensure that regional integration activities
and programmes are incorporated into the national
budget. Greater financial resources will make a large
difference to national mainstreaming and will assist
in increasing awareness of mainstreaming among all
stakeholders, as budgeting is normally debated by
parliamentarians and civil society. Rwanda’s experience
is shared in box 2.5.


Way forward


Mainstreaming regional integration in national
development plans and budgets is necessary to create
ownership and commitment to the process, which requires
systematic harmonization among regional and national
development plans, policies and strategies. Countries
therefore need to:


Box 2.5


Mainstreaming regional integration:
The Rwandan experience


Rwanda has mainstreamed regional integration,
as seen in the national policy and strategy on
EAC integration launched in February 2012. The
implementation processes include popularizing
the regional integration agenda, which assumes a
participatory approach—through televised policy
debates, radio messages and visits to border towns
by high-level officials.


To ensure sustainability, Rwanda:


• Identified and aligned national and regional
priorities, especially through the national policy
and strategy on EAC integration.


• Included monitoring and evaluation indicators
in the national strategy to ensure that actual
mainstreaming work is accomplished during the
span of the national development plan.


• Identified priority sectors and stakeholders.


• Instituted sector working groups to enhance
national dialogue.


Rwanda has also launched the EAC Integration
Clubs Project, which runs regional integration
competitions in schools. At the policy level,
mainstreaming was important to ensure that
appropriate indicators were formulated and
included in Rwanda’s Economic Development and
Poverty Reduction Strategy, 2013–2018. Although a
work in progress, it highlights regional integration
as one of the cross-cutting issues for long-term
development, aimed at bringing about faster
growth and poverty reduction.


Source: ECA Subregional Office for Eastern Africa.




12


• Accelerate ratification of treaties, protocols
and decisions.


• Establish a special ministry in charge of regional
integration (best option) or designate an existing
ministry or a national mechanism as a focal point
(second option).


• Provide adequate resources for the focal ministry
or mechanism and for integration programmes.


• Set up national committees involving all
stakeholders, including civil society, the private
sector, the judiciary and academia, to promote
consensus building and support for integration.


• Harmonize national laws and administrative rules
with regional agreements and programmes (either
by replacing national instruments with regional
instruments or by adopting identical instruments
for all partners).


• Share information on the costs and benefits of
integration and on outcomes of statutory and


other meetings and conferences on integration,
particularly at the level of RECs and the AU.


• Mainstream regional integration in educational
curricula at all levels.


Functional capacities, including strong legal and institutional
systems, are also required. The particular needs often
depend on the level of ambition for integration and country
circumstances. However, a degree of common institutions
and competencies should be in place as the minimum to
achieve commonly agreed regional goals and objectives.
Competencies in policy development, forward planning,
problem solving, and monitoring and evaluation all play
major roles. Greater efforts by countries in fulfilling integration
commitments at the national level will go a long way towards
accelerating regional and continental momentum, which
requires all parties to be consulted and mobilized.


The continued support of development partners is also
crucial in trade and market integration, implementation
of PIDA, MIP, AMV and the AU Summit Decision to
fast-track the establishment of CFTA and implement a
comprehensive action plan for boosting intra-African trade.




13


The envisaged CFTA will be one market; one market needs
one set of rules of origin. This chapter thus addresses the
important issue of harmonizing rules of origin to anchor the
CFTA. It examines the rules of origin regimes in five4 of the
eight main RECs and highlights the important COMESA–
EAC–SADC Tripartite negotiations on rules of origin as a
building block for crafting continental rules of origin. It
also draws lessons from practices elsewhere in the world,
particularly the EU.


Defining rules of origin


Rules of origin were designed to determine the source of
a product in a situation where it has accumulated value
along the production cycle from producers in various
countries. Establishing the country of origin of a product is a
fundamental requirement in trade policy formulation and an
integral part of preferential trade agreements, including FTAs.


Rules of origin can be preferential or non-preferential.
Preferential rules determine whether the products
imported are from a member country of a preferential
trading area or an FTA; non-preferential rules are generally
used to enforce all other restrictions, including antidumping
duties and quotas. Preferential rules are more restrictive
than non-preferential ones, as they must ensure that only
the goods originating in FTA signatory territories qualify for
preferential treatment.


In an attempt to curb trade deflection,5 countries in RECs
with reciprocal trade liberalization programmes have
increasingly used strict qualifying criteria to determine
product origin. As a general rule, the determination of origin
is based on the division of goods into two broad categories:


• Goods produced entirely in one country, in the same
geographical area and/or under one customs authority.


• Goods produced in multiple countries but with the last
substantial transformation taking place in one country.


In the latter case, a complex set of tools is applied to decide
the degree of transformation. The most common of these
tools are:


• The Harmonized Commodity Description and Coding
System (HS) to determine the change of tariff position
within the framework of the classification.


• A value-addition percentage test.


• Requirements for specified processes, including more
stringent special rules for strategic sectors.


The economic implication of rules of origin depends
greatly on how restrictive they are. To measure the
restrictiveness of such rules, Estevadeordal et al. (2009)
developed a restrictiveness index that ranges from 1
(least restrictive) to 7 (most restrictive). The Australian
Productivity Commission’s (2004) restrictiveness score
ranges between 0 and 1. In all cases, the rules of origin
restrictiveness index is an indicator of how demanding
a given rule of origin is for an exporter to comply with.
Factors that are likely to make rules of origin more
restrictive include more than single transformation
requirements; lists of operations insufficient to confer
origin; complex certification methods; and inefficient
customs verification and administration.


Restrictive rules of origin are often used not only to
protect the final goods producer but also to protect
local producers of intermediate goods and to increase
investment and employment. However, highly restrictive
rules tend to be part of traditional non-tariff barriers to
trade and could result in “trade diversion,” reducing the
total economic gains from FTAs. This term (and “trade
creation”) was coined by Jacob Viner in 1950 to highlight
the effects of regional integration arrangements in
general and the effects of customs unions in particular
(Viner, 1950). Trade diversion is said to occur when
trade is diverted from more efficiently to less efficiently
produced goods, resulting in higher market prices and
fewer welfare gains.


The application of stringent rules of origin brings forth
real challenges to smaller members of FTAs with less
or non-existent productive capacity. They might be
detrimental to some of their industries, as the choices
of sourcing their production inputs will be limited.


Chapter 3
Harmonizing Rules of Origin
across Africa




14


Furthermore, even in cases where rules of origin are
not restrictive, the costs associated with implementing
them could be burdensome to all stakeholders,
including policy makers and private sector operators.
These costs are particularly heavy on traders, as they
bear the burden of proving compliance with the rules
on sufficient processing. They can be even higher
for smaller firms, stemming from their limited or low
capacity to deal with divergences in rules of origin
across FTAs and international trade rules.


Rules of origin should therefore be designed to
minimize their use for protectionist purposes and
promote trade creation and market integration. On
the one hand, stringent rules of origin can stimulate
regional value chains provided that countries have
domestic productive capabilities and the preference
is large enough. On the other, although lax rules of
origin may mean that third countries not belonging
to the FTA will also benefit, one advantage might
be increased employment generated through local
processing enabled by foreign imports. (This is
exemplified by Singapore’s FTAs, which allow for
outward processing.) Thus the exact design of rules
of origin depends on the nature of countries and
products involved and should be revised over time,
subject to regular review.


Rules of origin in selected
African RECs


The main thrusts


To be eligible for preferential community tariff
treatment, RECs have established rules of origin
by which products would have to meet origin
requirements generally defined as follows: the goods
must be “wholly obtained”; a certain proportion of
domestic capital (usually higher) must be used in
their production; the proportion of imported inputs
used in producing the good must not exceed a certain
percentage (usually lower); and there must be a certain
minimum domestic value addition in the total value
of the product. The value added in the transformation
process is usually calculated on the basis of the value
of the local inputs used to manufacture the product
as a share of the value of the finished product. The
calculation thus determines the contribution to the
imported input arising from the use of local materials,
labour and other inputs.


The RECs generally have similar rules of origin based
on wholly produced goods, a general import content


rule of 40–60 per cent and a value-addition rule of 30–
35 per cent of ex-factory costs of imported materials.


The wholly produced criterion is relatively simple and
straightforward and usually applies to goods that are
not manufactured but extracted from the ground (such
as minerals) or grown from the soil (such as maize
and wheat). The rules of origin also tend to establish
a list of products that should qualify for community
tariff treatment, and the approved products must be
accompanied by a certificate of origin. RECs’ specific
rules of origin (where they exist) are described in
box 3.1.


Box 3.1


RECs’ rules of origin


West and Central Africa


Rules of origin in ECOWAS are based on the
following criteria: the goods have been wholly
produced in member States with a minimum of
60 per cent raw materials local content in accord
with the provisions of Article 3 of the protocol; the
goods are not wholly produced in member States,
but their production requires the exclusive use
of materials classified under a tariff subheading
different from that of the finished product; the
goods are not wholly produced in member States,
and their production requires use of materials
that have received a value added of at least 30 per
cent of the ex-factory price of the finished goods.
The rules of origin in this regional grouping are
considered to be among the simplest and least
restrictive.1 However, there is a sensitive product
exclusion list designed to protect infant industries,
which tends to muddy the rules’ apparent
simplicity.


ECCAS applies rules of origin based on the
following criteria: wholly produced goods, such
as products in the crude state of animal, vegetable
or mineral extraction and products of traditional
crafts; a minimum raw materials local content
in goods of 40 per cent; and goods that are
produced with raw materials entirely or partially
of foreign origin and that generate value added of
at least 30 per cent of the ex-factory price of the
finished goods.


Continued




15


Eastern and Southern Africa


COMESA’s rules of origin have five criteria under
which goods can be accepted in the importing
country as having been produced or manufactured
within the common market. First is the wholly
produced rule: the goods should be produced totally
in the exporting member State such that there are
no foreign materials added to the manufacturing
process. These include live animals and agricultural
produce such as maize, cotton and so on. Second
is the material content rule: when the goods are
being made with some foreign materials added to
the manufacturing process, those foreign materials
should not be more than 60 per cent of the CIF
(cost, insurance, freight) value. Third is the value-
addition rule: when the goods are being made and
the raw materials are foreign, then in the course of
the manufacturing process there should be at least
35 per cent value addition. Fourth is the change in
tariff heading rule: when the companies manufacture
the goods and the raw materials are foreign, during
the manufacturing process the tariff heading of
the final product should be different from the tariff
heading of the foreign raw materials. And fifth is
the goods of particular economic importance rule:
the goods are in the list approved by the ministers
in charge of trade in COMESA member States (also
called the Council of Ministers) and are regarded
as very important in the economic development of
either the exporting member or the region. In the
process of manufacturing, there should be at least
25 per cent value addition (for example, goods such
as minibuses that are assembled in some member
States).


In EAC goods are accepted as originating in a partner
state where they are consigned directly from a partner
state to a consignee in another partner state and where:
they have been wholly produced; or they have been
produced in a partner state wholly or partially from
materials imported from outside the partner state or of
undetermined origin by a process of production that
results in a substantial transformation of those materials.
In such a transformation, the CIF value of those materials
must not exceed 35 per cent of the total cost of the


materials used in the production of the goods; the value
added resulting from the process of production must
account for at least 35 per cent of the ex-factory cost of
the goods; and the goods must be classified or become
classifiable under a tariff heading other than the tariff
heading under which they were imported.


The EAC rules of origin (and indeed those of ECOWAS
and COMESA) also include a cumulative treatment that
stipulates that, for implementing these rules, the partner
states shall be considered one territory and that raw
materials or semi-finished goods originating in any of
the partner states shall be deemed to have originated
in the partner state where the final processing or
manufacturing took place.


The rules of origin in SADC are very different. Initially,
they were as simple as those of COMESA and EAC, but
when the SADC FTA Protocol was launched they became
a bit tighter and were crafted under the principle of
encouraging optimum utilization of regional resources
and promoting backward and forward linkages in
production chains. Hence SADC adopted rules of origin
that are largely product-specific, with much-increased
value-added requirements and much-decreased import
content. (The results of a review of these rules of origin in
2004 led to some reform of the rules to relax some of the
product-specific criteria.)


North Africa


A draft FTA agreement among the UMA countries was
signed by their Ministers of Commerce in June 2010.
The agreement provides for the adoption of a Maghreb
Protocol on rules of origin that will form an integral
part of the FTA. A working group has been meeting
since 2011 to develop the draft protocol. It is looking
into various rules of origin scenarios in terms of general
and specific rules, as well as trading relationships
(intra-Maghreb, EuroMed and Africa). The multiple rules
include rules depending on the type of agreement that
bind the partners (for example, generic rules with the
League of Arab States, which includes UMA countries,
specific rules with some countries on a bilateral level
within the framework of the Agadir Agreement and
different rules with the EU).


Note: 1. Estevadeordal et al. (2009); Choi (2009).


Box 3.1


RECs’ rules of origin (continued)




16


Challenges of implementation
of rules of origin


The above rules of origin apply to different but overlapping
trade regimes, as well as to varying levels of country
development in RECs. Evaluations of FTAs (EAC in 2009,
SADC in 2011 and COMESA in 2012) also point to a number
of implementation issues and challenges including:


• Capacity and competence of issuing authorities.


• Limited understanding and grasp of the rules of origin,
particularly for companies producing and selling in the
REC market.


• Administration of certificates of origin. It is often
plagued by illicit practices, such as the presentation of
fake or fraudulent certificates of origin by traders.


• Concerns among some industry players over the
impact of restrictive rules of origin, including the
impact that substantial transformation requirements
can have on regional trade and development.


• Customs agents’ frequent resistance to and/or limited
understanding of rules of origin and trade facilitation
requirements.


• Imposition of administrative and other unnecessary
barriers to prevent the entry of foreign products.
Impediments include mounting numerous
checkpoints and road blocks and demands for
excessive documentation. Such barriers are likely
to be even more pernicious without dispute
settlement mechanisms and with the imposition
of non-tariff barriers.


• Administrative costs for certificates of origin. These can
reach nearly half the value of the duty preference.


Field visits and consultations with stakeholders show that
the private sector feels that rules of origin in the RECs have
a limited impact on boosting intraregional trade and trade
competitiveness and have not markedly helped generate
downstream processing industries.


Some partnership arrangements, such as European
Partnership Agreements and the US African Growth and
Opportunity Act, contain complex rules of origin that are
at odds with those of the RECs. Traditional and emerging
trading relationships with external trading partners are
also perceived as a factor complicating the effectiveness
of the rules of origin in some regional trading blocs. For
instance, some industrialized economies in Africa produce


a lot of the components that go into the manufacture and
assembly of vehicles, and therefore would like to insist on
a high percentage of value addition as originating criteria.
The same argument applies to textiles, where the country
would like to forestall the possibility of trade deflection,
whereby cheap textiles and garments from outside the
region could be transhipped and end up parading as
originating goods within the REC. Concerns over trade
deflection that is tantamount to dumping are real.


The RECs are striving to address some of these challenges
through measures that include issuing electronic
certificates of origin to make the implementation of
rules of origin more effective, efficient and transparent;
simplifying the trade regimes to enable small-scale cross-
border traders to avoid being subject to complex rules of
origin; and establishing customs–business partnerships to
enhance private involvement in the regional integration
process, including institutionalized public–private dialogue
on customs matters.


Rules of origin: Experiences and
lessons from outside Africa
This section examines rules of origin regimes in regional
integration arrangements outside Africa, particularly the
EU, the world’s largest trading bloc.


With few exceptions, the principles underlying the rules of
origin in the EU are similar to those in Africa’s RECs. The key
elements are:


• Wholly obtained goods. These are goods whose
production does not involve any relation with any
other country outside the EU. The product is obtained
by processing carried out only in the EU and without
incorporating materials of any other country outside
the EU. It covers plants, minerals and live animals,
among others.


• Sufficiently transformed goods. This principle refers
to any product whose production involves countries
outside the EU. The product is produced using
materials of third countries or was partially processed
abroad. In such a case, the rules of origin included in
EU FTAs contain a long list that establishes, for each
product defined by its tariff classification and its
description, the needed processing to be carried out in
the EU to consider the product as “originating.” There
are three basic criteria used to determine if a product
was sufficiently transformed in the EU: a value-added
rule in which the value of all the materials used does not
exceed a certain percentage of the ex-works price of the
product. If the value of the materials does not exceed




17


the threshold fixed by the rule, the good is admissible.
The remaining criteria are explained below.


• A change of tariff classification. In a case where a
good is produced from materials of any heading except
that of the product, the tariff classification of the non-
originating materials used (four digits) needs to be
compared with the tariff classification of the good. If
the tariff classification of both is not the same, the rule
is succeeded. If a product is manufactured from yarn,
for instance, the rules permit use of the quoted non-
originating material. That is, you may import yarn and
the material in a previous state of production (fibres),
but you may not import the material in a later state
of production (fabric). Some FTAs have an annex that
provides for an alternative rule, more flexible for some
products and sometimes under quotas.


• Minimal operations. In addition to the specific rule
of origin attributed to a product, there is a need to
verify that the operation that was carried out in the
EU goes beyond the minimal operations listed in the
specific set of rules of origin related to the EU. There
is a provision listing a series of operations (packaging,
simple cutting, simple assembling, simple mixing). If
the production carried out in the EU is one of those
listed and nothing else was made there (no material
was produced or transformed), the product cannot be
considered as originating.


• Cumulation. In case the rule of origin attributed
to a product is not admitted, the product may still
be considered originating if the value of the non-
originating materials that did not manage to fulfil the
rule does not exceed a concrete threshold specified
in each set of rules of origin (normally 10 per cent or
15 per cent of the ex-works price of the good).


• Direct transport rule or non-manipulation rule. Even
if the product is originating (wholly obtained or
sufficiently transformed as specified), there is still a
need to verify that the product was sent from the EU
to the partner country without being manipulated in a
third country, apart from the mere operations needed
for keeping the product in good condition. The specific
conditions on this issue and documents needed to
demonstrate the fulfilment of this rule contained in
the relevant rules of origin need to be verified.


• Prohibition of duty drawbacks. In some sets of rules
of origin, there is a provision that impedes the use of
duty drawbacks on the materials imported into the
EU that are used in the production of a good intended
to receive preferential treatment in a partner country.


Duty drawbacks permit one not to pay at import or to
recover the duties paid at import on the materials that
are used for further processing while final goods using
those materials are exported. The specific conditions
on this issue and documents needed to demonstrate
the fulfilment of this rule contained in the relevant set
of rules of origin need to be verified.


Moving towards a single transformation rule for textiles
and clothing increases trade between FTA partners.
In addition to the significant effect of the shift from
triple to single transformation in the case of the African
Growth and Opportunity Act (de Melo and Portugal-
Perez, 2011), the change-in-tariff classification criteria
at the six-digit level was found to be more helpful in
promoting trade through international production
networks in low-value components such as auto parts
(Nag and De, 2011).


Cumulation between FTA partners increases trade. These
results confirm the findings of an impact evaluation of
the EU system of cumulation, which appeared to directly
increase trade between EU partners by about 22 per cent,
while the lack of cumulation between EU partners could
impede trade by 25–70 per cent.


With respect to harmonizing rules of origin, the 1997 EU
Single List establishes the foundation of the harmonized
(uniform) rules of origin of the EU’s FTAs. This single list was
later integrated into the Euro-Mediterranean Association
Agreements between the EU and various southern
Mediterranean countries, the Western Balkan countries
and other FTAs.


Harmonizing rules of origin
to anchor the CFTA


Principles and recommendations


The regional integration landscape in Africa is characterized
by multiple RECs and overlapping memberships, making
the process and cost of implementing and administering
different rules of origin very complex, particularly for
countries belonging to two or more RECs. A functional
CFTA unifying all the RECs therefore requires that the same
good not have different rules of origin. Divergent rules due
to multiple and intertwined RECs constitute a stumbling
block to the continental project.


Harmonizing rules of origin is therefore imperative in
any inter-REC FTA and is certainly a prerequisite for a
meaningful CFTA. It requires introducing uniform or
essentially similar rules of origin across RECs.




18


Harmonization can be conceived in two ways:
consolidation of rules of origin of different RECs into
continental rules using the COMESA–EAC–SADC
negotiated rules of origin as a building block; or
application of diagonal or full cumulation between the
rules of origin in existing RECs to build bridges towards
continental rules of origin.


There is an emerging common understanding among
theorists and practitioners that continent-wide common
rules of origin that are simple, less restrictive and
accommodative of asymmetries can be instrumental in
expanding intra-African trade within the CFTA. It is also
important to emphasize that rules of origin in whatever
form they are designed can be compromised if they are
not effectively administered by customs and border
administrations. There should therefore be provisions
and mechanisms to guard against potential abuses,
such as fraudulent certificates of origin, trade deflection
and circumvention. Efforts to harmonize rules of origin
should also address the lack of capacity to implement
and enforce them.


From the review of the rules of origin in the RECs and
judging from the work within the three Tripartite
secretariats (COMESA, EAC and SADC) on rules of
origin, easy consensus on the criteria relating to wholly
produced goods may be anticipated. As already stated,
the wholly produced criterion applies to goods that are
not manufactured but extracted from the ground or
grown from the soil. There is also very little controversy
about the fact that certain simple operations such as
labelling, repackaging or simple mixing of chemicals
cannot be sufficient to confer origin. The challenge
arises where a good is manufactured using imported
components. This can be a complex issue, on which hard
negotiating is likely as the RECs move towards the CFTA.


The following seven steps are therefore put forward as
guiding principles for negotiating harmonized rules of
origin for the CFTA (figure 3.1).


Step 1


Negotiations should consider the imperative for
Africa’s structural transformation through upscaling
value addition to Africa’s abundant natural resource
endowments that are predominantly exported in
raw form. Several AU decisions and initiatives enjoin
African countries to lay a solid foundation for industrial
development and integration at the subregional
and regional levels. The key message is that instead
of exporting raw materials in an unprocessed form,
processing, upgrading and diversification of products


will ensure maximum use of Africa’s indigenous factor
endowments and natural resources. Taking into account
the comparative strengths of countries in natural
and other enabling resources and infrastructures, as
well as the existing and potential linkages of these
resources across national frontiers, such an industrial
development and integration strategy can help trigger
a transformation by promoting linkages among various
industrial subsectors and between industry and other
sectors at both the national and regional levels.


Step 2


At the same time, CFTA rules of origin should consider
the reality of Africa’s overwhelming dependence on
imports—particularly capital and intermediate goods for
manufacturing—as well as imbalances in development
stages and productive capacities. Some African countries
are more industrialized and can produce many of the
components that go into the manufacture of goods
(assembly for vehicles, for instance) and would want
to insist on a high percentage of value addition as an
originating criterion. The same argument could apply
to textiles, where a country may like to forestall the
possibility of trade deflection. Other countries are less
endowed with production capacity and could be hard
pressed to benefit from rules of origin that insist on very
high value addition and local content requirements.
Priority should therefore be given to affording adequate
industrial policy space to those countries that may
benefit from existing preferential treatment only if they
are unable to source materials from their domestic
market or a wider regional space. Furthermore, all efforts
should be made for ensuring that such countries are
linked to production in regional value chains.


The rules of origin need to be realistic and fair by
matching the existing manufacturing capacity of
both the least and most industrialized members on a
complementarity and comparative advantage basis to
ensure that the rules are “owned” and so implementable.
They should focus not on the protection of customs
revenue but on regional integration, trade and
partnership-development results, to ensure that they
help harmonize FTA and development partnerships.
And they should be business-friendly, making sufficient
provisions for full participation of small-scale industries
that form the large majority of Africa’s businesses, thus
enhancing vertical and horizontal business integration.


Step 3


Countries should encourage private sector interests to
shape negotiating positions. In some countries, the views




19


of the private sector are consistently sought to shape
the national negotiating position. One should therefore
expect vested interests not only at COMESA–EAC–SADC
negotiations, but also at the continental level.


Step 4


CFTA rules of origin should be simple, transparent
and less restrictive. They should not be used directly
or indirectly as instruments to pursue protectionist


objectives, and they should not have a distortive or
disruptive influence on trade.


Step 5


Generic rules of origin should be the entry point in
negotiations and draw on the arrangements in RECs
in Eastern, Southern and Western Africa, because
consensus is likely to be less contentious. The wholly
produced goods rules would certainly fall under this


The use of “de minimis”
provisions could be applied


within agreed thresholds


Consider the compelling
imperative for Africa’s structural


transformation


Consider Africa’s over-
whelming dependence on
imports from outside the


continent, particularly capital
and intermediate goods for


manufacturing processes


Encourage private sector
interests to shape


negotiating positions


Rules of origin should be simple,
transparent and less restrictive,
should not be used directly or


indirectly as instruments to
pursue protectionist objectives


and should not have a distortive
or disruptive inuence on trade


Straightforward rules of origin
should be the entry point in the


negotiations, drawing on the
existing arrangements in RECs


in Eastern, Southern and
Western Africa


“Wholly produced” rule
should be combined with
product-specic rules of


origin that would cover a list
of products whose
production involve


countries outside the CFTA


1
2


3


4


5


6


7


EC
CA


S


SADC


UMA


CE
N


-S
AD


CO
ME


SA
EAC


IGAD


ECO
W


AS


Figure 3.1


Steps for negotiating harmonized rules of origin


Source: Authors’ illustration.




20


category; these will be goods whose production does
not involve any relation with any third country outside
the CFTA (plants, minerals and live animals). It is in this
area where the potential for exploiting the creation
of regional value chains along corridors should
be explored.


Step 6


The “wholly produced” rule can be combined with
product-specific rules of origin that would cover a
list of products whose production involves countries
outside the CFTA. In this case, the CFTA negotiating
countries could agree and establish for each product
defined by its tariff classification and its description
the required processing to be carried out in the FTA
to consider the product as originating. To determine
if a product is sufficiently transformed in the region,
it will be incumbent upon the negotiating partners
to agree on the value-added percentage of the value
of all the materials used relative to the total value of
the product. The determination of this value-added
percentage needs to strike a balance between the
structural transformation objectives and the imbalances
in countries’ development and productive capacities
(as mentioned above).


Step 7


The use of de minimis and cumulation provisions
could be applied within agreed thresholds (normally
10 per cent or 15 per cent of the ex-factory price of the
good). Such provisions could provide some flexibility
for non-originating materials to qualify. Empirical
studies and their theoretical predictions suggest that
full convergence/cumulation (as opposed to bilateral
and diagonal cumulation) should be the instrument
of choice for harmonizing rules of origin. This would
allow for the sourcing of goods continentally through
cumulation of origin whereby a commodity may
be progressively processed in more than one CFTA
partner state before being exported. Unfortunately,
with the exception of the new draft EAC rules of origin


(September 2012), de minimis and cumulation beyond
REC members are not widely used in Africa. There are,
however, indications that the draft rules of origin of the
COMESA–EAC–SADC Tripartite FTA are likely to address
the issue of cumulation to encourage deeper integration
by introducing an “outward process” provision.


Indeed, the continental rules of origin can use the
negotiated Tripartite rules of origin as a starting point.
The FTAs of the other RECs would be consolidated into
a second trade bloc, which would then merge with
the COMESA–EAC–SADC Tripartite FTA into a single
CFTA (figure 3.2). Based on the principle of the “acquis,”
the negotiated Tripartite rules of origin would be the
building block for the fusion between the Tripartite
and the second trade bloc.


Operational issues


The certification process must be cost-effective for rules
of origin to achieve their expected development results,
and for the CFTA this would require common forms and
certification procedures for rules of origin. It would also
require a dispute-settlement mechanism, which should
have the authority to impose sanctions for infringement
of the rules.


From a business perspective, one of the main obstacles
in applying FTA preferences is a lack of information
on FTAs, confidentiality of information required in
certificate of origin forms, and delays and administrative
costs of preparing applications for the certificates.
Hence the need to establish a continental information
system on rules of origin that will link certificate-issuing
authorities and customs border posts—and that will
enable certification procedures such as application and
clearance of consignments to be conducted online.


Capacity building will be required for personnel dealing
with issues within governments and business. It should
include awareness campaigns among stakeholders on
the full range of technical and administrative issues
involved in an African continental market.




21


CFTA
?


COMESA


EAC


SADC


ECCAS


ECOWAS


UMA


?


?


COMESA


EAC


SADC


?


?


?


?


?


Source: Authors’ illustration.


Figure 3.2


Accelerating the consolidation of RECs to facilitate continental rules of origin






23


Africa’s dependence on overseas trade of more than 80 per
cent, and intra-African trade of just 10 per cent, contrast
sharply with other regions: intraregional trade in North
America is 40 per cent and in Western Europe is 60 per cent.
If Africa trades more with itself, it can take advantage of
shorter travel distances, but to make good on this natural
advantage it must do more to remove tariff and non-tariff
barriers and boost its industrial base.


Africa’s physical infrastructure (rail, roads, communications
and power) is inadequate, deterring regional trade. Africa
needs to upgrade its infrastructure, fix institutional and
organizational systems, and scale up its managerial and
skilled labour.


Such upgrades are addressed within the framework of
continental programmes, notably PIDA, the TAH Network
and regional infrastructure programmes that are increasingly
being harmonized, as in ECOWAS–Union Economique et
Monétaire Ouest Africaine (UEMOA), the Tripartite countries
and COMESA–EAC–IGAD. RECs have adopted their FTA
regimes and a broad range of measures and programmes for
trade facilitation—a definition of which is hard to pin down,
although the benefits are clearer (box 4.1).


Yet transport costs remain the highest in the world. It
costs, for example, US$5,000 to ship a 20-foot container
from Durban to Lusaka—far more than the US$1,500 it
costs to ship the same container from Japan to Durban
(TradeMark Southern Africa, 2011). They stay this way
largely because, although Africa’s programmes are well
conceived, implementation is poor. Inadequate resources
and lack of skills, as well as lack of political will, all
contribute. Exogenous factors, notably poor security,
also weaken implementation.


It is dear to facilitate trade and transport, given the
considerable costs of buying equipment and training
staff. Even so, studies demonstrate that benefits outweigh
the costs. A study by the Organisation for Economic Co-
operation and Development (2005) illustrates that there is
a link among increased trade flows, government revenue
and improved trade facilitation, and that the last also has a
positive effect on countries’ attractiveness to foreign direct
investment (FDI).


This chapter first examines key strategies within RECs,
comparing trade facilitation measures and identifying
common threads and differences, best practices and gaps,


Box 4.1


Trade facilitation—definition and benefits


A broad definition of trade facilitation encompasses
policies to reduce trade transaction costs, including
“behind-the-border” policy reforms and the reduction
of transaction costs resulting from cumbersome
administrative customs, documentary requirements
and border procedures that affect cross-border
movement of goods and services. The term also
covers simplification of the logistics, documentation
and customs procedures involved in transiting goods
through ports and land borders. It refers, too, to
“domestic” policies and institutional structures that
create an enabling environment for trade. Finally, it
can take in harmonization of national and regional
standards with international standards.


ARIA IV and V looked closely at trade facilitation
issues. ARIA IV identified the key non-tariff barriers
and trade facilitation gaps that still impede intra-
African trade. ARIA V, using computable general
equilibrium modelling, found that in a CFTA scenario
intra-African trade would increase from 10.2 per cent
in 2010 to 15.5 per cent in 2022. Improved trade
facilitation and tariff reductions would more than
double such trade in the period, to 21.9 per cent.
A similar study by the Asia-Pacific Economic
Cooperation (2002) using such modelling found that
reducing trade costs by 6 per cent through trade
facilitation measures would raise the region’s GDP
by 0.9 per cent.


Chapter 4
Harmonizing and Strengthening Trade
Facilitation Measures and Programmes




24


with an eye on achieving a CFTA by 2017. It then looks
at rail, ports and the main missing road links, which are
crucial as road transport already carries more than 80 per
cent of regional trade. Traditional funding for infrastructure
has limitations, so the chapter reviews other options.
Subsequently, the chapter focuses on one-stop border posts
and their management systems, underlining the importance
of automation and training. It ends with recommendations,
primarily for RECs and member States, that envisage strong
cooperation among public and private agents.


Trade facilitation measures and
programmes to underpin the CFTA
This section presents a comparative analysis and
assessment of trade facilitation approaches in RECs.
They have already been designed by RECs, but as RECs
operate independently and their implementation rates
differ by measure or programme, the point of departure
for the CFTA is to borrow from the best that RECs can
offer. In other words, their task is to harmonize, refine
and enhance these approaches.


Acceptance of basic international rules
in trade facilitation


The rapid growth of international trade after World
War II brought with it (and was itself boosted by) the
need to establish global rules of trade and harmonize
customs procedures and documentation. Reforms
were championed by international organizations and
secretariats, notably the General Agreement on Tariffs
and Trade, which eventually became the World Trade
Organization (WTO); the World Customs Organization
(WCO), including the Kyoto Convention; and the United
Nations Economic Commission for Europe (UNECE).


WTO


WTO deals with global rules of trade among nations. At
its heart are WTO agreements negotiated and signed by
the bulk of the world’s trading nations, including most of
the RECs’ member States (table 4.1). A full member of WTO
must fulfil the conditions of membership laid out in the
WTO agreements.6


Article V (Freedom of Transit), Article VII (Valuation for
Customs Purposes), Article VIII (Fees and Formalities
Connected with Importation and Exportation) and Article
X (Publication and Administration of Trade Regulations)
of the General Agreement on Tariffs and Trade, 1947, are
particularly relevant to trade facilitation. Articles V, VII
and X form part of the current WTO negotiations on trade
facilitation that began in 2004. Negotiations to clarify and


update these provisions are in advanced stages, as reflected
in members’ textual proposals prepared by WTO (2006).


WCO


The WCO is the global centre for customs expertise
and plays a leading role in discussions and promotion
of modern customs systems and procedures. Key
international agreements include the HS Convention;
the International Convention on the Simplification and
Harmonization of Customs Procedures (the Revised
Kyoto Convention—box 4.2); the ATA Convention on
Temporary Admission (the Istanbul Convention); the
Arusha Declaration on Customs Integrity; and the
SAFE Framework of Standards to Secure and Facilitate
Global Trade.


The HS multipurpose nomenclature is used as the
basis for customs tariffs and for the compilation of
international trade statistics. It includes about 5,000
commodity groups, each identified by a six-digit code
arranged in a legal and logical structure with well-
defined rules to achieve uniform classification. The HS is
used in freight tariffs, internal taxes, transport statistics,
compilation of national accounts and so on. The HS has
been amended occasionally, the last time in 2012.


Box 4.2


The Revised Kyoto Convention


The Revised Kyoto Convention came into force in
2006. It comprises several key governing principles:
transparency and predictability of customs controls;
standardization and simplification of the goods
declaration and supporting documents; simplified
procedures for authorized persons; maximum
use of information and technology; minimum
necessary customs control to ensure compliance with
regulations; use of risk management and audit-based
controls; coordinated interventions with other border
agencies; and a partnership with trade.


UNECE


UNECE has produced more than 50 agreements on
transport and trade facilitation, including the TIR
Convention (discussed more in the following subsection).


UNECE membership is confined to Europe, but international
agreements elaborated under its auspices are open for
signature, ratification or accession by other countries. African
states have shown little enthusiasm (table 4.2), however,




25


Table 4.1


Ratification or accession by African states to key international conventions


Country WTO ratification WCO Revised Kyoto Convention WCO HS Convention
Algeria  
Angola  
Benin  
Botswana   
Burkina Faso  
Burundi 
Cameroon  
Cape Verde  
Central African Republic  
Chad  
Comoros
Democratic Republic of Congo   
Republic of the Congo  
Côte d’lvoire  
Djibouti 
Egypt   
Equatorial Guinea
Eritrea 
Ethiopia 
Gabon   
The Gambia 
Ghana 
Guinea 
Guinea-Bissau 
Kenya   
Lesotho   
Liberia 
Libya  
Madagascar  
Malawi  
Mali  
Mauritania 
Mauritius  
Morocco  
Mozambique  
Namibia  
Niger  
Nigeria  
Rwanda   
São Tomé and Príncipe
Senegal   
Seychelles
Sierra Leone 
Somalia
South Africa   
South Sudan
Sudan  
Swaziland  
Tanzania  
Togo  
Tunisia  
Uganda   
Zambia   
Zimbabwe   


Note: States with WTO observer status are Algeria, Comoros, Equatorial Guinea, Ethiopia, Libya, São Tomé and Príncipe, Seychelles and Sudan.
Source: Compiled by ECA consultants from published sources.




26


Table 4.2


Ratification or accession by African states to international conventions recommended in various REC treaties


Country
Road Traffic


1968
Road Signs


1968
Harmonize Frontier


1982
Temp. Import Private


1954
Temp. Import Commercial


1956
Touring Facilities


1954
Algeria
Angola
Benin
Botswana
Burkina Faso
Burundi
Cameroon
Cape Verde
Central African Republic    
Chad
Comoros
Democratic Republic of Congo  
Republic of the Congo
Côte d’Ivoire  
Djibouti
Egypt 
Equatorial Guinea
Eritrea
Ethiopia
Gabon
The Gambia
Ghana  
Guinea
Guinea-Bissau
Kenya 
Lesotho 
Liberia     
Libya
Madagascar
Malawi 
Mali 
Mauritania 
Mauritius
Morocco    
Mozambique
Namibia 
Niger
Nigeria  
Rwanda 
São Tomé and Príncipe
Senegal    
Seychelles   
Sierra Leone  
Somalia
South Africa 
Sudan 
South Sudan
Swaziland
Tanzania
Togo  
Tunisia
Uganda  
Zambia


Zimbabwe 


Note: Full names of conventions are Convention on Road Traffic, 1968; Convention on Road Signs and Signals, 1968; International Convention on Harmonization of Frontier
Controls of Goods, 1982; Customs Convention on Temporary Importation of Private Vehicles, 1954; Convention on Temporary Importation of Commercial Vehicles, 1956; and
Convention Concerning Facilities for Touring, 1954.
Source: UNECE Transport Agreements/Conventions, status at 11 November 2010.




27


despite REC treaties having borrowed liberally from
UNECE agreements. Accession to UNECE agreements is
recommended.


The acceptance of common international trade rules
coupled with the introduction of automation has created
a positive environment for cargo handling and improved
the relationship between customs and the trading
community. More standardized and simplified documents
and procedures recommended by WCO improved cargo
clearance times. Automation has helped minimize human
contact and rent seeking, as traders can submit customs
declarations from their offices, assess customs duties payable
and make payments online. Risk management and audit-
based controls, too, have expedited cargo clearance times.


Global changes to customs formalities have also
affected port operations. Automation has enabled
port authorities, shipping agencies, freight forwarders,
customs bureaux and transporters to exchange
information online. (Two examples—the Kilindini
Waterfront Automated Terminal Operating System
in Kenya and single-window systems in Ghana and
Mozambique—are boxed in chapter 5.)


As the continent moves towards the CFTA, the remaining
member States should consider joining WTO and
acceding to key conventions. The latter include Road


Traffic, 1968; Road Signs and Signals, 1968; Harmonization
of Frontier Controls of Goods, 1982; Temporary Importation
of Commercial Road Vehicles, 1956; Temporary Importation
of Private Road Vehicles, 1954; and Touring Facilities, 1954.
ECOWAS decision A/Dec 2/5/81 on Harmonization of
Highway Legislation urges member States to ratify the 1968
Road Traffic and Road Sign Convention. This is echoed in the
COMESA Treaty (Article 85). The EAC Treaty also urges the
ratification of the United Nations Convention on Multimodal
Transport and the Customs Convention on Containers, 1972.


Regional customs transit systems


The treaty establishing ECOWAS in 1975, the Preferential
Trading Area (PTA) Treaty of 1981 and other treaties that
followed later embodied Africa’s desire for and expression
of economic cooperation and integration. The PTA Treaty
had four protocols: Customs Cooperation (Article II);
Transit Trade (Article V); Transport and Communication
(Article VII); and Simplification of Trade and Documents
and Procedures (Article X). Based on such protocols,
RECs created trade facilitation instruments: the ECOWAS
Convention on Inter-state Transit of Goods (ISRT), the PTA
Road Customs Transit Declaration and the UDEAC Inter-
state Transit Regime (TIPAC).


UMA, in contrast, has acceded to the TIR Convention
(table 4.3).


Table 4.3


Ratification or accession by UMA countries to international agreements adopted under the auspices
of UNECE, as of 30 December 2011


Number International agreements and conventions Algeria Morocco Tunisia


1. Road Traffic, 1949   
2. Road Signs and Signals, Protocol, 1949 
3. Road Signs and Signals, 1968  
4. Contract Road Goods Transport, 1958  
5. Contract Road Goods Transport, Protocol, 1958 
6. Touring Facilities, 1954   
7. Touring Facilities, Protocol, 1954   
8. Temporary Importation of Private Road Vehicles, 1954  
9. Temporary Importation of Commercial Road Vehicles, 1956 
10. Temporary Importation of Aircraft Parts, 1956  
11. TIR Convention, 1954  
12. TIR Convention, 1975   
13. Customs Container Convention, 1972   
14. Dangerous Goods by Road, 1957  
15. Liability Dangerous Goods by Road, 1989 
16. Perishable Foodstuffs, 1970 
17. Vehicle Regulation, 1998 
18. Global Vehicle Regulation, 1998 
19. Harmonization of Frontier Controls of Goods, 1982 
20. Customs Container Convention, 1954 
21. Issue and Validity of Driving Permits 


Note: Libya and Mauritania have signed none.
Source: www.unece.org.




28


These regional customs transit systems were inspired by
prevailing best practices exemplified by the operation
of the TIR Convention. However, while the PTA Regional
Customs Transit System mirrors the traditional customs
approach of separating customs declaration procedures
from customs bond or guarantees procedures, ECOWAS
in ISRT and CEMAC in TIPAC follow the TIR Convention
according to which the carnet serves both customs
procedures.


The pillars of the TIR Convention (also mentioned in
the ISRT and TIPAC conventions) are that goods should
travel in secure vehicles or containers; duties and taxes
at risk should throughout the journey be covered by a
regionally valid guarantee mechanism; goods should
be accompanied by a regionally accepted carnet taken
into use in the country of departure and accepted in the
countries of transit and destination; and customs control
measures taken in the country of departure should be
accepted by the countries of transit and destination.


Admittedly, the TIR Convention system that embraces
the customs declaration and guarantee in one
document is more attractive than the two-tier PTA
version. However, the challenge it poses is that the
entire system falls apart if member States fail to put
in place any one of its pillars. The sticking point is a
regionally valid guarantee mechanism.


ECOWAS made attempts to push through with ISRT.
A supplementary convention on guarantee mechanisms
was adopted in 1982. According to the 1982 A/P4/5/1982
Convention on Road Transit, security for duties and taxes
was to be provided by a guarantee from reputable financial
institution affiliated with the West African Clearing House
or any government-approved institution in member States.


In Directive C/DIR3/12/88 on the Implementation of the
Land Transport Programme, the Council of Ministers
directed the Executive Secretariat to accelerate the
setting up of a single guarantee system for goods
in transit.


In 1990, the “urgent necessity” to establish a satis-
factory mechanism led to the signing in Banjul of the
A/SP1/5/90 Supplementary Convention according to
which the mechanism for ISRT should consist of a chain
of national bodies responsible for the guarantee, each
national body being designated by each member State.


In response to these directives, some member States
(such as Burkina Faso and Mali) designated their
shippers councils as national guarantee bodies, but the
absence of action from other member States meant that


a chain of guarantee institutions was lacking. And the
limited financial capacity of shippers councils inspired
little confidence that such institutions could be credible
interlocutors for the ISRT (de Matons, 2004).


In the 1990s, COMESA focused its efforts on the
Regional Customs Transit Declaration, which paid off.
The declaration became widely accepted in Southern
Africa (Simuyemba, 1994). Recent efforts by COMESA
to implement its Regional Customs Transit Guarantee
scheme was launched against the backdrop of ECOWAS
and CEMAC experience, which shows that national
tracking associations and shippers councils alike are too
weak (financially and managerially) to manage regionally
valid guarantee systems (LOGISTRA Consulting, 1999).


COMESA’s subsequent idea to enlist the insurance
industry has the merit that the industry already
manages third-party motor insurance schemes, which
although not perfect are among RECs’ more successful
projects. Participating states establish national sureties
that are regionally bound through “inter-surety
agreements.” At the apex are the Council of Sureties,
which manages the scheme, and an insurance pool,
which underwrites the operations of the Regional
Customs Transit Guarantee scheme. The scheme is
acquitted in national customs ICT systems in a manner
similar to how national bonds are acquitted. 7 Acquittal
of the Regional Customs Transit Guarantee Bond
in Kenya, for example, is reported to be faster than
acquittal of national bonds.8 About 200 carnets were
issued in 2012. Participating sureties are Burundi, Kenya,
Rwanda and Uganda. Djibouti, Ethiopia and DRC have
expressed interest in joining.


If the COMESA trials of national sureties are successful,
the model can be rolled out beyond COMESA. However,
if more UMA member States accede to the TIR
Convention, two parallel systems in Africa will emerge—
an issue to be tackled in the run-up to the CFTA.


A continent-wide customs transit regime is therefore
both necessary and within reach. As discussed earlier,
after years of procrastination and tinkering with ideas
on regional customs, transit-system test results in the
Northern Corridor and elsewhere indicate the feasibility
of rolling out a regional customs transit regime. Any of
the existing schemes (Customs Convention on Inter-
state Transit of Goods, TIPAC or COMESA) can provide
the basis for such a regime. What is now required is the
political will to act.


A regional customs transit system would yield tangible
benefits, particularly for landlocked developing




29


countries (LLDCs), because of their impact on overseas
shipments and their intraregional trade.


Market access and services


Transport is an important sector recognized in all the
treaties establishing RECs. Policy convergence among the
RECs embraces cross-border movement of vehicles that
are registered in member States; adoption of regional
regulatory instruments, such as third-party motor vehicle
insurance; and adoption of common technical standards
for vehicles, including vehicle load control.9


Vehicles in cross-border trade


The licensing of vehicles engaging in cross-border trade is
generally left to member States. The ECOWAS Convention
on Inter-state Road Transport10 states that the conditions
of delivery of licences shall be defined in bilateral
and multilateral agreements. The CEMAC Inter-state
Regulation on Licensing of Road Carriers11 states that road
carriers for their own account or for professional purposes
need to be licensed.


In the ECOWAS and CEMAC/ECCAS regions, bilateral
agreements contain freight-sharing arrangements.
The Abidjan Protocol on Inter-state Road Transport
stipulates that freight is distributed between countries,
two-thirds for Niger and one-third for Togo for goods
carried through ports and half each for other goods.
Passenger traffic is split 50/50. Freight forwarders
and other shipping agents adhere to the distribution
of freight as stipulated in the agreement. The 1983
bilateral agreement between the Central African
Republic and Cameroon allocates 40 per cent of transit
cargo to Cameroon and 60 per cent to the Central
African Republic.


Although in COMESA–EAC–SADC licensing of vehicles
is also a government responsibility, it is not based
on reciprocal quotas but rather on consideration
of operators’ fleet capacity and related criteria. The
COMESA Carriers Licence Scheme goes one step further,
seeking to replace various trip permits and other
national licensing requirements for foreign carriers with
a common regional standard. It also envisages replacing
national with regional payments, permits and licences
(Simuyemba, 1994). Under this scheme, transporters
procure regional licences issued by authorities in their
own countries, thus avoiding the hassle of obtaining
licences at each border crossing and in foreign currency.
(Although few countries have ratified the scheme, its
logic and potential still resonate and its positive impact
on trade facilitation cannot be denied.)


The ECOWAS–ECCAS quota system in contrast, particularly
how it is managed by the authorities (shippers councils),
has been criticized for contributing to inefficient transit
transport in West and Central Africa (de Matons, 2004;
LOGISTRA Consulting, 1999).


Across the continent, therefore, the regulatory framework
governing transit transport is still unsettled. Attempts at a
regional regime have secured only modest results, while
policy and domestic legislation are incompatible—not
conducive to the CFTA. The multilateral permit scheme in
Europe offers a useful example of best practice that Africa
can adopt. Permits are based not on quantitative criteria
but on qualitative criteria relating to the financial and
managerial capacity of operators.


Third-party motor vehicle insurance


Vehicles in transit must either purchase insurance at each
border crossing or arrange for a regional third-party motor
vehicle insurance scheme. RECs have adopted regional
schemes for this purpose, including third-party motor
insurance schemes in ECOWAS (Brown Card), COMESA
(Yellow Card) and CEMAC (Pink Card), as well as the Fuel Levy
Scheme of the Southern African Customs Union (SACU).
Some countries in UMA have opted for the Green Card,
which is valid for European and Mediterranean countries.


The overarching objective of the regional schemes is to
compensate victims of traffic accidents caused by vehicles
in transit. However, funding modalities differ. In the SACU,
the Fuel Levy Scheme, as the name suggests, is based
on taxes levied on fuel purchases, while card systems are
based on premiums. The advantage of the fuel levy is that
the fuel price includes taxes, collected and consolidated
in a special fund for victims of traffic accidents. However,
the system works well for domestic traffic but is hardly
suitable for vehicles in transit, which may purchase little
or no fuel and yet cause traffic accidents involving huge
compensation claims. For that reason, the card schemes
based on the European Green Card appear to be better
designed for regional and continental transit traffic.


The ECOWAS, CEMAC, COMESA and UMA schemes work
on a collaborative arrangement between member States
and insurance organizations to ensure that victims of
road traffic accidents caused by transit vehicles are
compensated and that medical expenses of drivers and
crew are settled. When an accident occurs in the territory
of a participating state, a national bureau of the state
concerned takes responsibility on behalf of the equivalent
bureau of the state in which the card is issued. This chain is
backed up by repayment and settlement mechanisms as
well as reinsurance.




30


The strength and sustainability of card systems,
however, depends on the number of participating
member States and insurers; the commitment of
member States to support the system; member States
or insurance associations meeting their obligations,
notability and payments of contributions to the
guarantee fund; solid sales of insurance cards; and fast
settlement of claims. Performance of the systems may
differ substantially depending on the financial and
managerial capacity endowment of individual card
systems. The UMA member States (Green Card) are no
doubt well served, and the COMESA Yellow Card system
(11 participating member States) appears to be in a
fairly good financial position (COMESA, 2012).


Except for the SACU Fuel Levy Scheme, the card
schemes share common features, making it easy to
establish a continent-wide system—perhaps dubbed
the “Black Card.”


Vehicles: Technical standards


All the RECs have established regional technical standards
for vehicles, notably permissible axle-loads, maximum
laden weights and vehicle dimensions (height, width
and length). The rationale is to strike a balance between
facilitating transit traffic and preventing road damage.
The adoption of technical standards for vehicles in the
different RECs (table 4.4) is evidence of convergence of
views on the need to address this issue. The main area of
divergence relates to maximum laden weights. ECOWAS
and EAC have upper limits of 56 tonnes, more than the 50
tonnes for CEMAC and 46 tonnes for COMESA. CEMAC has
a lower permissible vehicle length of 18 metres, while the
other RECs allow up to 22 metres.


Vehicles: Load control


RECs have for many years adopted the same approach
of harmonizing axle-load and vehicle standards while


leaving the vehicle load control to member States.
However, the COMESA–EAC–SADC Tripartite Initiative
has this on its agenda. The common procedures and
regulations contained in the EAC Vehicle Overload
Control Bill 2012 appear to reflect the outcome of the
Tripartite Initiative, providing for:


• Weighbridge approval, calibration, verification and
audit standards.


• Identification and conspicuous sign marks for
weighing stations and weighbridges.


• Standardized forms for weighing operations.


• Regional weighbridge certificates acceptable to all
national road authorities.


• Linking of weighbridge certificates with customs.


• Identification of authorized officers.


• Use of modern ICT in operation of weighbridges.


• Obligatory training of weighbridge and weighing
station staff under a regionally prescribed training
syllabus at accredited institutions.12


RECs’ vehicle technical stands are converging, despite
some way to go on overloading. But this is not
insurmountable, as the result of the Tripartite Initiative
indicates agreement on a possible common regulatory
framework.


Road user charges


Efforts to generate revenue for road construction and
maintenance in the RECs are apparent in the specialized
road agencies and dedicated road funds in many
member States. The convergence of views is that road


Axle-load limit Maximum load Maximum length Maximum height Maximum width
(tonnes) (tonnes) (metres)


REC Single axle Tandem axle Triple axle


CEMAC 13 21 27 50 18 4 2.5


ECOWAS 12 21 25 56 22 4 2.5


COMESA 10 16 24 46 22 2.5


EAC 10 18 24 56 22 4.3 2.65


Source: Compiled by ECA.


Table 4.4


Technical standards for vehicles in different RECs




31


user charges should be ploughed back into maintaining
and improving road networks. Road users also caution
against the proliferation of charges, fees and taxes to
minimize administrative costs and delays.


RECs have left it to individual member States to determine
the composition and rate of user charges, which therefore
differ by state. COMESA produced a formula in 1991 to
harmonize road user charges for its member States: US$10
per 100 km for heavy goods vehicles, US$6 per 100 km for
rigid heavy goods vehicles and US$5 per 100 km for big
buses carrying more than 25 passengers.


The recognition by RECs that proliferating charges
constrain regional trade has not led to an agreement on
common user charges, but criteria and guidelines for
them should be set. It may be possible, for example, to
agree that they should be consolidated and collected
by one authority to reduce costs and delays associated
with current payment approaches.


Visas and free movement
of people


Intraregional trade is fuelled by traders, transporters (crew)
and tourists. Traders not only need minimum interference,
they also may find it necessary to establish branch offices
to promote their business. Free movement of people is
enshrined in RECs treaties. Special protocols such as the
ECOWAS Protocol on Free Movement of Persons, the Right
of Residence and Establishment detail provisions (and a
phase-in plan for implementation to avoid unintended
consequences; see ECOWAS, 2008). The convergence of
views in many RECs, as discussed in chapter 2, is that the
free movement of nationals of member States within the
region is the essence and rationale for the establishment
of the community—but that the implementation of
this objective must be phased in to avoid unintended
consequences. Accordingly, RECs have moved at different
speeds to achieve their goals.


Banking and payments


Most of the RECs envision the progressive development of
their communities from FTAs to customs unions with the
ultimate aim of becoming monetary and economic unions
with a single currency. A single currency lowers transaction
costs, eliminates exchange risks and lessens price instability,
facilitating trade between countries of the region.


Although the RECs have yet to establish monetary and
economic unions, the situation on the ground is more
nuanced. The ECCAS member States that also belong to
CEMAC13 use the Central African CFA franc as a common


currency. The ECOWAS member States that also belong
to UEMOA14 use the West African CFA franc as a common
currency. And the four SACU member States that also
belong to CMU15 have established a common currency
area. The four countries retained their currencies, but
they have fixed-ratio value among them.


The above picture implies that trade transactions among
CEMAC and UEMOA member States benefit from the
existence of common currencies, but beyond such
common currency areas the need for a functioning
payment system remains acute. Hence the steps to
minimize the negative effects of exchange risks and price
instability through convergence programmes (AU, 2009b).


ECOWAS member States outside the monetary union
have over the years shown keen interest in establishing
comprehensive payment systems based on “real-time
gross settlement systems.” Institutions established to
advance the initiative include the West African Monetary
Agency, the West African Monetary Institute, the West
African Bankers’ Association and central banks.


COMESA launched its much anticipated cross-border
payment system on 3 October 2012. The regional
payment and settlement system registered its first
transactions between Bramer Bank of Mauritius and
Fina Bank of Rwanda through the countries’ central banks.
The system paves the way for trading on open account,
the predominant method of payment within the EU and
other parts of the world. The CFTA may call for continent-
wide banking and payment systems, hence adjustments
to RECs’ current systems or even new mechanisms.


Corridor initiatives


A framework


The corridor provides a good framework to consider
transport infrastructure needs and logistical issues
and challenges. The African Action Plan, adopted at
the African Preparatory Meeting to the International
Ministerial Conference of Landlocked and Transit
Developing Countries and Donor Countries and
Financial and Development Institutions on Transit
Transport Cooperation in 2003, lists the main corridors
in Africa (table 4.5). Africa has 16 landlocked countries
with a population of more than 200 million, which face
distances to ports of 1,000–1,500 km.


Permanent secretariats


RECs intergovernmental meetings provide opportunities
to review physical and non-physical barriers along




32


corridors,16 but the need to pay closer attention to the
problems and needs of particular corridors has led
some member States in ECOWAS, COMESA and EAC
to establish permanent secretariats to help overcome
non-tariff barriers along the corridors. Port congestion
leading to demurrage charges, transit delays and
cumbersome border-crossing formalities are issues
of particular concern to LLDCs.


The Northern Corridor, established in 1986, and those more
recently set up (table 4.6) have brought institutional, legal
and organizational solutions to bear on logistical problems.


The opportunity they offer to transit operators, enabling
them to participate in corridor meetings, helps identify
real problems and solutions, thereby facilitating effective
implementation of measures and programmes.


Spatial development initiatives


Although transport corridors are important in
improving logistics, their effectiveness is undermined
by their inability to improve corridor infrastructure
and facilities, which remain under the responsibility
of individual member States.


Table 4.5


Main corridors in Africa


Corridor Distance Remarks


Dakar–Mali 1,250 km Rail


Abidjan–Burkina Faso–Mali 1,200 km Multimodal options to Ouagadougou, then road


Tema/Takoradi–Burkina Faso–Mali 1,100 km to Ouagadougou Road


Lomé–Burkina Faso–Niger/Mali 2,000 km Road


Cotonou–Niger–Burkina Mali 1,000 km up to Niger Multimodal options


Lagos–Niger 1,500 km Road


Port Harcourt–Chad


Doualas–Central African Republic–Chad 1,800 km Multimodal


Pointe Noire–Central African Republic–Chad 1,800 km Rail/river


Lobito–DRC–Zambia 1,300 km Not currently used


Luanda–DRC–Ruanda–Burundi Not currently used


Walvis Bay–Zambia–DRC (Trans Caprivi) 2,100 km to Lusaka Road


Walvis Bay–Botswana–South Africa (Trans Kalahari) 1,800 km Road


Durban–Zimbabwe–Zambia–DRC (North–South Corridor) 2,500 km to DRC Multimodal options available


Maputo–South Africa 600 km Multimodal options


Beira–Zimbabwe–Zambia (DRC) 1,500 km Multimodal options


Naccala–Malawi–Zambia–DRC 1,800 km to Lusaka Multimodal options available


Mtwara–Malawi– Zambia–DRC Not yet used for transit


Dar es Salaam–Zambia–DRC (TAZARA Corridor) 2,000 km to Lusaka Multimodal options available


Dar es Salaam–Rwanda–Burundi–Uganda–DRC (Central Corridor) 1,400 km to Kigali
1,600 km to Kampala


Multimodal options available


Tanga–Uganda 1,500 km Not yet developed


Mombasa–Uganda–Rwanda–Burundi–DRC (Northern Corridor) 1,200 km to Kampala
2,000 km to Bujumbura


Multimodal options available


Berbera–Ethiopia 840 km Road


Djibouti–Ethiopia 900 km Multimodal options available


Assab –Ethiopia 900 km Not currently used


Massawa–Ethiopia Not currently used


Port Sudan–Ethiopia Not currently used


Lagos–Niger–Mali–Lagos–Chad as part
of Central Corridor Light Rail Transit


8,000 km Multimodal options available


Source: ECA (2003).




33


The SADC development corridor initiative tries to address
this weakness through its regional and international
financing strategy. Dating back to the years when South
Africa was under apartheid and when the front-line
member States (Angola, Mozambique, Tanzania and
Zambia) with help of development partners invested
heavily in alternative transport corridors—notably the Dar
es Salaam (TAZARA) and Beira corridors—to free Zambia
and Zimbabwe from dependence on South African ports
and corridors, the development corridor initiative has
mobilized large investments for infrastructure. Identified
priority infrastructure projects for 2012–2017 cost US$50
billion (Southern Africa Today, 2012).


The spatial concept views corridor development in an
integrated manner, upgrading transport corridors with
simultaneous exploitation of other opportunities. The
Maputo Corridor is the only corridor that has reached
its full potential. SADC has identified eight corridors for
development and investment (table 4.7).


The corridor concept—whether viewed as a platform to
address logistical issues and problems or a framework for
investments in transport and other areas—blends well
with the notion of regional trade and integration, because
both concepts focus on the interests of more than one


country. The corridor approach will thus be highly relevant
to the CFTA.


Monitoring mechanisms


In spite of improvements in road infrastructure and
adoption of a broad range of trade facilitation measures,
transit traffic along many corridors in RECs still
encounters many obstacles. RECs try to address them,
but because of their wide-ranging nature and because
many are corridor-specific, corridor initiatives have
come to play an increasingly important role in problem
resolution.


An ad hoc Task Force on Seamless Transport Services
along the Northern Corridor between Mombasa, Kenya,
and Bujumbura, Burundi, established in 2005, has
been transformed into a regular Seamless Transport
Committee. It works under the framework of the
East African Trade and Transport Facilitation Project.
The committee has considered issues on reducing
transit times; implementing cargo-tracking systems
to eliminate police/customs convoys; increasing port
security in accordance with the International Ship
and Port Facility Security code; reducing dwell time at
Mombasa Port; decreasing border-crossing times; and
establishing a port community base system at
Mombasa Port.17


In the ECOWAS–UEMOA region, the proliferation of
checkpoints, bribes and delays has been the subject
of decisions. ECOWAS Resolution C/RECs4/5/90 urged
partner states to reduce their number.


Decision A/DEC/8/94 on the Creation of National
Committees for Monitoring the Effective
Implementation of Decisions and Protocols in the Matter
of Transportation also refers to the issue of proliferation
of official or abusive checkpoints on interstate roads.
The matter reached the heads of state in Decision


Table 4.6


Transport corridors with permanent secretariats


Corridor Member States


Northern Burundi, DRC, Kenya,
Rwanda, Uganda


Central Burundi, DRC, Rwanda,
Tanzania, Uganda


Djibouti Djibouti, Ethiopia


Lagos–Abidjan Benin, Côte d’Ivoire,
Ghana, Nigeria, Togo


Source: Compiled by ECA.


Table 4.7


Development corridors in SADC


Corridor Origin–destination Mode
North–South Durban, Gaborone, Harare, Lusaka, Lubumbashi Rail, road


Maputo Maputo, Johannesburg, Harare, Manzini Rail, road


Beira Beira, Lusaka, Livingstone, Blantyre Rail, road


Nacala Nacala, Lilongwe, Blantyre Rail, road


Dar es Salaam Dar es Salaam, Lusaka, Lilongwe Rail, road


Trans-Kalahari Walvis Bay, Pretoria, Johannesburg Road


Trans-Caprirvi Walvis Bay, Lusaka Road


Lobito Lobito–Shaba–Zambia Currently closed


Source: Compiled by ECA.




34


A/DEC 13/01/03, relating to the establishment of a
Regional Road Transport and Transit Programme, which
established joint border posts and observatories to
identify bad practices along corridors.


Since then a special project, the West African Trade Hub,
has provided support to ECOWAS–UEMOA, providing
data on three indicators: road checkpoints; delays en
route; and corruption. The project covers all the major
corridors of West Africa. For three corridors, bribes are
declining, but the number of checkpoints has remained
almost constant (table 4.8). Along single corridors,
the Tema–Ouagadougou Corridor appears to have
made progress by reducing delays, but the Lomé–
Ouagadougou Corridor has seen delays worsen.


ECOWAS–UEMOA is aware of the bad impact that
excessive checkpoints, delays and bribes have on
regional trade and integration. These bad practices
increase the cost of goods to the detriment of
consumers and trade in general, and the unfair and
ill-treatment of transitors can provoke violence, as
happened in Cameroon (box 4.3).


The observatories launched by RECs will remain
relevant when the CFTA comes into force. However,
as the observatories are provided under technical
assistance programmes, their continuation has to be
addressed. Accordingly, consideration should be given
to incorporating observatories in the work programmes
of corridors or RECs.


Lagging rail and port
development, missing road
links, mobilizing funds


Trade-related infrastructure embraces maintenance,
improvement and construction of new facilities in rail, ports
and roads (as well as air, inland transport, inland container


depots, dry ports, storage, ICT, and energy generation and
transmission). They are all needed to ensure the seamless
movement of traded goods and services from centres of
production to centres of consumption. The radial nature
of transport corridors in Africa, with no or little connection
between corridors (particularly railways also built according


Table 4.8


Checkpoints, delays and bribes along three ECOWAS corridors


Corridor Distance (km)


Checkpoints (controls per 100 km) Delays (minutes per 100 km) Bribes per 100 km (XOF)


2007 2011 2007 2011 2007 2011


Bamako-Ouagadougou via
Heremakono


934 2.6 2.6 25 21 7,184 5,365


Lomé-Ouagadougou 1,020 1.7 1.6 12 18 2,695 1,532


Tema–Ouagadougou 1,057 2.2 2.2 48 27 2,412 1,480


Source: USAID/UEMOA reports on road governance.


Box 4.3


Douala–N’djamena Corridor services resume


A dispute that had disrupted transport services
between Cameroon and Chad has been resolved.
Consequently, the movement of goods between
Douala Port and N’djamena, Chad’s capital, are
expected to resume soon. The disruption occurred
following clashes between Chadian drivers and
Cameroonian security officials on 14 February.


Among the decisions arrived at was that the
number of security checkpoints between Douala
and N’djamena be reduced to three, and that a
special task force—Red Brigades—be set up within
the next few days to ensure that the decision on
checkpoints is respected.


Chadian transporters who carried goods from
Douala have over the years been complaining
that each trip to and from Douala to N’djamena
cost them US$1,000 in bribes to Cameroonian
officials, even when they had all the necessary
transportation and identification documents. This
bribe cost was in turn passed on to consumers in
Chad. This issue has been the subject of discussions
in several meetings between officials of the two
countries and meetings of ECCAS, leading to the
institution of a number of regulations.


Source: Etahoben (2012).




35


to different gauges and without interconnections except
in Southern Africa) underscores the critical need for
constructing “missing links.”


Rail and ports


Railway transport infrastructure in Africa is inadequate.
With a surface area of 30.2 million km2, Africa has only
89,390 km of rail, or 2.96 km per 1,000km2, compared
with 60 km per 1,000km2 in Europe. Regional disparities
are enormous. Southern Africa has the lion’s share of
Africa’s railway network (38,513 km), followed by North
Africa (19,931 km), East Africa (19,293 km), West Africa
(9,717 km) and Central Africa (2,536 km).


Most networks outside South Africa operate with their
original structures and tracks, which are more than
100 years old (with few upgrades). The low axle-load,
low speeds, and small, undercapitalized networks have
been under increased pressure from road transport,
which benefits from improved technologies in road
construction and vehicle design. In an attempt to
improve railway capacity and performance, railway
concessioning beginning in the mid-1990s became
a major policy instrument. The concessioning of the
Abidjan–Ouagadougou route in 1995 was followed
by initiatives in 14 African countries.18 There have
been reports of success (Cameroon) and of failure and
cancellation of concessions (Tanzania, Zambia; box 4.4).


Port development and services in the RECs present many
challenges. The rapid evolution and increase in container
traffic calls for expanding container storage space and


handling equipment. Ports also must improve safety, security
and the environment to meet international standards.


Improving cargo clearance from ports requires joint
efforts to improve port efficiency and productivity and to
strengthen the take-off capacity of transport operators,
and so the decline of rail transport has hurt port operations
in RECs, except UMA and Southern Africa, where railway
transport is still strong.


Missing road links


Given the radial nature of many of the transport corridors,
the missing links in road transport should narrow as the
TAH takes shape. Indeed, Northern Africa, with only 1 per
cent of the TAH network unpaved, has made real efforts,
while other regions, notably Eastern and Central Africa,
whose shares of missing links are still 17 per cent and 65
per cent, need to redouble their resolve (table 4.9).


Mobilizing funds


Resource mobilization faces many challenges. Official
development assistance, FDI and loans from international
financial institutions are the main sources of financing,
each with its own limitations. African countries therefore
need to consider public–private partnerships (PPPs) and
other innovative financing mechanisms.


Official development assistance


Africa (excluding North Africa) received US$20 billion
in official development assistance in 2009.19 Divided by


Box 4.4


Zambian government “grabs” assets


Alexander Chikwanda, Finance Minister, disclosed
that the government had acquired concession
rights granted to Railway Systems of Zambia when
he addressed the nation on Zambia National
Broadcasting, saying that the compulsory acquisition
of the concession rights had been necessitated by the
consistence of Railway Systems of Zambia acting in a
manner prejudicial to the interests of Zambians.


Mr. Chikwanda said the compulsory acquisition of
the concession rights had been carried out because
of unacceptably high derailments, as well as loss of
life and property. In announcing the “nationalization,”
he also cited mismanagement of infrastructure and


rolling stock, which led to the deterioration of assets
and loss to the country as a whole.


He stated that the decision had been arrived at in
accordance with the cabinet’s mandate to safeguard
the interest of the people of Zambia, adding that
Zambia Railways Limited would take over the
operations and management of the railway net-
work, which was subject to a concession
agreement in 2003.


President Michael Sata directed that the railways be
“grabbed” and declared that he was ready to be taken
to court if need be.


Source: City Press (2012).




36


the number of recipient countries and spread over many
sectors (education, agriculture, infrastructure), it can
only be a limited source of infrastructure financing.


FDI and international financial institutions


FDI potential as a source of financing for transport
infrastructure is greater, but as investment is predicated
on traffic volumes, which are low for most of the missing
links across an empty country, the role of FDI is also
likely to be limited.


Loans from financial institutions present similar
challenges, as most of the potential borrowers are least
developed countries. These countries are eligible only
for International Development Association resources
of the World Bank and the African Development Fund,
which are limited. Least developed countries’ access to
commercial bank lending is hamstrung by their inability
to bear high interest rates.


For these reasons, African states should request AfDB to
raise its capital fund to enable it to increase the resource
base of the African Development Fund window, which
provides grants and loans to the majority of African
states. Africa should also request the World Bank to step
up its aid to Africa by increasing resource allocation to
infrastructure development and expanding co-financing
arrangements with other financial institutions, notably
AfDB and development partners.


RECs and member States should make the fullest
use of development aid, including aid for trade as
demonstrated by the North–South Aid for Trade
Programme (EAC, 2011b).


PPPs


Although the role of PPPs in infrastructure-related
activities in Africa has so far been limited and the


results in certain sectors such as railway mixed,
potential can be enhanced if high-level advocacy
aimed at increasing awareness and understanding
of policy and decision makers is made; if greater
networking of PPPs and programmes aimed at
sharing information and experience is promoted; if
comprehensive PPP training of policy makers and
practitioners is undertaken; and if academic and
national training institutions (particularly those
engaged in training civil servants) offer regular short-
and long-term training programmes on PPPs. Existing
institutional and regulatory arrangements to assess
PPP readiness and standardize project development
and implementation processes are being reviewed and
strengthened.


Development corridors and spatial development


Given the natural resource endowment of Central
African countries, such as DRC and Central African
Republic, where most of the missing links are found, an
approach involving development corridors and spatial
development can be adopted. The Inga Dam project,
for example, could be used as an anchor project for
other economic projects, justifying the development of
transport infrastructure and ensuring its sustainability.
Countries could also use their natural resources as
collateral or outright exchange for infrastructure
development funds.


Innovative financing mechanisms


The international community should consider new
modalities of financing, including:


• Regional venture funds—grants from multilateral
organizations to pay development and management
fees for selected countries or projects and to help
promote interest in riskier infrastructure projects by
reducing development risk.


Table 4.9


TAH missing link indicators, 2008


Region Total TAH network (km) Paved roads (km) Missing links (per cent)


Northern Africa 13,292 13,195 1


Eastern Africa 9,932 8,201 17


Southern Africa 7,988 6,817 15


Central Africa 11,246 3,891 65


Western Africa 11,662 10,561 9


Total Africa 54,120a 42,665 21


a. Total distance does not include overlaps and extensions to Cape Town.
Source: NEPAD Infrastructure–MLTSF Study, 2008.




37


• Equity participation in local financial institutions—
when a foreign institution purchases shares in a
selected bank that lends to small infrastructure
projects.


• Co-financing—parallel loans to an infrastructure project
by a multilateral financial institution and a local bank.


• Bank-to-bank loans—a foreign institution making
a long-term loan to a local bank for forward lending
to small projects.


One-stop border posts and border-
post management systems
Goods in transit traditionally stop at both sides of the
border to comply with exit procedures in one country and
import or transit procedures in the other. One-stop border
posts (OSBPs) are intended to provide space and facilities
where transit traffic stops once for both inspection and
clearance by the authorities of the two countries.


Some of the early OSBPs came about purely for
convenience. Remote border posts in Canada, for example,


sometimes found it convenient to use nearby border posts
in the United States. In time, the concept evolved and
spread to Europe and Latin America.


In Africa, the SADC Protocol on Transport
Communications and Meteorology foresees the
establishment of more OSBPs. The Chirundu OSBP
between Zambia and Zimbabwe was one of the first
such posts in Africa, opening for business in 2009
after years of negotiations (figure 4.1). OSBPs are now
operating or under construction in ECOWAS, COMESA
and EAC.


Financing


Momentum for OSBPs gathered speed with financing
from the European Development Fund (€44.5 million) to
ECOWAS–UEMOA. Detailed engineering designs were
prepared for five OSBPs: Noepe (Ghana/Togo); Seme/
Krake (Nigeria/Benin); Malanville (Benin/Niger); Paga
(Ghana/Burkina Faso); and Kouramalé (Mali/Guinea).
For budgetary reasons, only the first three OSBPs were
funded. ECOWAS–UEMOA is securing more funds
for OSBPs, while the European Development Fund is
financing OSBPs in East Africa.


Figure 4.1


Impact of Chirundu OSBP


Source: Adapted from www.translogafrica.com/page/border_posts_osbp.


Oces Oces


Trac leaving Zambia


Zimbabwe


Zimbabwe exclusive use areas


BO
RD


ER


BO
RD


ER


Zambia exclusive use areasCommon control areas with secure perimeter


Public
processing


area


Zambia exit controls
Zimbabwe entry controls


Trac leaving Zimbabwe


Oces Oces
Public


processing
area


Zambia


Zimbabwe exit controls
Zambia entry controls




38


Layout


OSBPs can be built on the border (figure 4.2), on each
territory (figure 4.3) or on the territory of one country. The
Chirundu (Zambia/Zimbabwe) and Noepe/Elubo (Ghana/
Côte d’Ivoire) OSBPs are built on each territory, while the
Séme/Krake (Benin/Nigeria) OSBP is being built on the
territory of the country (Benin). Member States are taking
steps to pass legislation and sign bilateral and inter-agency
agreements to build and operate OSBPs.


Facilities


The facilities to be installed depend on the volume of
transit traffic and the structure of trade, which in turn
determines the type of checks needed. Facilities should
take into account future needs. The layout should bear
in mind the requirements for pedestrians, passenger
vehicles, goods vehicles and livestock.


OSBPs require adequate facilities for their functions.
Large OSBPs need the following: two entry/exit gates
with separate lanes for pedestrians and vehicles; a main
building that would host offices of police, immigration,
customs, health, and phytosanitary and veterinary
agents; separate buildings for the customs inspection
unit; stores; a scanner; a weighbridge; a building
for transit operators (freight forwarders, insurance
transporters, banks); a parking lot for all categories of
vehicles; a garage for firefighters; toilet blocks; a covered
area serving as a rest zone; a road network system
and various networks; a borehole and water tower; an
internal part made of wire mesh; a double security fence
with an external part made of masonry, 3 metres high;
and a livestock enclosure, 3 metres wide and opening
directly to the area between the two fences and made as
a passage for livestock.20


Cargo-clearance systems


Cargo handling and the performance of import, export
and transit activities at OSBPs bring together a host of
public agents on both sides of the border (customs,
immigration, policy, phytosanitary, health, veterinary,
bureau of standards and licensing authorities) and
private operators (transporters, insurance, banks, freight
forwarders, pedestrians and tourists). OSBPs need to
coordinate all of them.


As certain functions, such as the collection of taxes and
arrest of offenders, may require extension of national laws
to a partner state, OSBPs will have to adopt laws (bi- and
multilateral) to empower foreign public agents to exercise
these powers outside their home territory.21


Most OSBPs use one of three systems of cargo clearance:
sequential (more the traditional way of doing things),
simultaneous and single-window (more used with OSBPs).
When goods arrive in OSBPs (figures 4.4 and 4.5), one
system is applied.


With sequential inspection, goods must be cleared
by the agents of the country of exit before the agents
of the importing country intervene. Harmonizing
procedures are unnecessary. Vehicles may share
a common parking facility, but clearance is done
separately by agents of the two countries. In other
words, there is not much to be gained from the
traditional sequential inspection model.


With simultaneous (or near simultaneous) inspection,
procedures of the two countries have to be harmonized.
The two countries’ customs agents, for example, cannot
conduct simultaneous inspections if their procedures are
incompatible. How, say, can they work together if one


Figure 4.2


OSBPs built on the border
Figure 4.3


OSBPs built in each territory


Border


Country A Country B


Border


Country A Country B


Source: Authors’ illustration. Source: Authors’ illustration.




39


requires all containers to be opened for inspection while
the other (applying risk management techniques) requires
only 5 per cent of them to be opened?


The simultaneous inspection model covers not only
customs but all public agents with their procedures and


formalities (police, immigration, phytosanitary, health).
It changes not only procedures and documents but
also the way of doing business. Equipment will have
to be standardized and working hours harmonized,
all requiring comprehensive inter-agency cooperation
(OSCE, 2012).


Oces


Border


Heavy-duty vehicles


Light vehicles


Heavy-duty vehicles


Country A Country B


Light vehicles


Border


Oce


Country A Country B


OceA B


A B


Heavy-duty vehicles


Heavy-duty vehicles


Light vehicles


Light vehicles


Figure 4.4


OSBPs at the common border


Figure 4.5


OSBPs on the territory of member States


Source: Authors’ illustration.


Source: Authors’ illustration.




40


With single-window inspection, the services of the two
countries are not only in the same building but also in the
same area. To accomplish import or transit formalities, the
transitors (pedestrian, buses, goods vehicles) make only
one stop at the desk where all the information is recorded.
Agents of the two countries then access the information
they need and take the necessary steps to clear goods or
issue visas. (Automation, as chapter 5 discusses in detail,
has made single-window systems far easier to run.)


Harmonizing approaches


If clearance is based on simultaneous or single-window
inspection, the two neighbours must work out modalities
for cooperation and coordination. They should harmonize
procedures, standardize equipment and adopt common
operating methods.


Bilateral agreements would provide the framework
for the type of system and prescribe the institutional
and organizational entities for the clearance system.
Most are supervised by ministerial committees (which
provide policy guidelines and which are supported by
chief executives or permanent secretaries), but the real
work falls to joint border operations committees (JBCs),
composed of the two countries’ public agents. A customs
agent usually chairs the JBC alternately—good practice
given the key role that customs plays in clearing cargo.
JBCs are responsible for day-to-day operations and
prepare business plans and budgets.


How the JBCs in different countries finance their budgets
is yet to be seen, as many JBCs are not yet operational and
the matter has not been treated in bilateral agreements
available to researchers. In the SADC region, operational
budgets are likely to be financed from service charges
levied from JBC users. The alternative is for governments
to shoulder the cost of building and operating JBCs.
But even then a distinction could be made between
operational activities (with responsibility vested in JBCs)
and management of OSBP infrastructure (turned over to
separate public or private organizations). Agreements
would of course spell out the duties on each side.


Although OSBPs are being developed with state funds,
both the public and private sectors are important. Joint
decision making would not only facilitate mechanisms
and modalities for coordination and cooperation but also
secure commitment for effective implementation.


Role of automation


Automation plays a crucial role in speeding up
cargo clearance at OSBPs: online information makes


preclearance of goods possible; application of risk
management techniques minimizes the number of
physical inspections; customs bonds can be retired
as soon as goods exit the territory; and interface and
connectivity with other relevant partners, such as freight
forwarders and other customs administrations, facilitate
cargo monitoring and clearance.


Training and certification


Training of managers and operational staff must embrace
both skills enhancement and instillation of a new culture
of cross-border cooperation in harmonized, standardized
and simplified procedures among public and private
operators.


A training programme for OSBP operators in RECs is likely
to call for heavy financial and human resources given the
broad range of public and private agents at each OSBP
and their number. Financially, the best way to estimate a
figure is, say, a proportion of the cost of construction. To
take an example from the ECOWAS–UEMOA OSBP project:
the cost of building the Akuna–Noepe OSBP is €9 million;
5 per cent of that cost for training is €450,000. Perhaps
inadequate for all training needs, €450,000 is still a good
start and would boost OSBPs’ effectiveness.


Certification of operators, such as freight forwarders and
transporters, based on technical and financial capacity
requirements may well eliminate small players, but the
policy should yield efficiency gains and contribute to
regional trade and integration.


Impact of customs transit systems


Regional customs transit systems will facilitate OSBPs
because a single regional customs bond will replace many
national bonds, and goods will travel in secure vehicles
or containers in line with regional transit regimes, thus
obviating the need for physical inspection (unless seals
have been tampered with).


Impact of cargo tracking


Cargo tracking has been introduced in countries like Ghana
and Kenya as a substitute for customs- or police-organized
convoys to the borders. As many trucks arriving at OSBPs
at the same time puts pressure on systems, cargo tracking
helps promote smooth operations.


Conclusions and recommendations


The Directive of the Heads of State and Government calling
on RECs to strengthen and harmonize their programmes




41


ahead of the CFTA in 2017 is valid, given variability between
successes and deficiencies. Getting regional customs transit
systems up and running effectively is crucial.


The construction of OSBPs across the continent is a
good strategy, but OSBPs are more than an exercise in
infrastructure provision—they are a unique opportunity
to simplify border crossing. They should have clearance
systems that, preferably, apply simultaneous or single-
window cargo clearance.


The effective implementation of the CFTA will depend
not only on the tariff reductions and uniform rules of
origin to be negotiated but also on good infrastructure


and elimination of non-physical barriers through full
implementation of trade facilitation.


As trade-related infrastructure deficiency in Africa
touches on the whole spectrum of infrastructure, PIDA,
RECs and member States should make every effort
to mobilize funds. The financing gap after traditional
sources of funding have been exhausted calls for
innovative ideas.


In sum, the task ahead entails all actors working
collaboratively to harmonize, enhance and align policy
and procedure to make trade facilitation serve the CFTA,
such that all Africans gain.






43


Chapter 5
ICT for Regional Trade and
Integration in Africa


ICT has the potential to transform business in Africa, driving
entrepreneurship, trade, innovation and economic growth.
This chapter offers a brief sketch of recent trends and the
potential of ICT in several areas, by reviewing e-commerce
in Africa and the barriers to developing it nationally and
regionally. It looks at regional integration initiatives outside
Africa and in RECs to see how they incorporate ICT into
trade facilitation. The chapter concludes with examples of
successful application of ICT in fostering trade and with
policy recommendations for African governments, RECs
and development partners.22


Poor interconnectivity and infrastructure, as well as long
distances, hinder trade growth among African countries
and between them and the rest of the world (Freund and
Rocha, 2011; Brenton and Isik, 2012; World Bank, 2008).
Moreover, rent seeking, distorted transport markets and
lengthy dwell times at border crossings reduce productivity
and inflate prices (especially for road transport), which
are compounded by cumbersome transit procedures,
overregulation, multiple checkpoints along corridors
and poor data management (Freund and Rocha, 2011;
Bromley and Foltz, 2011; AU and ECA, 2010). The upshot
is that African countries lack competitiveness (Arvis et al.,
2012). By contrast, transit in Europe—which provides a
comparative yardstick—has transformed into a seamless
network over the last five decades.


Cheaper and faster ICT connectivity has created the
conditions for increasing trade while reducing transport
and logistics costs, particularly for LLDCs (UNESCAP, 2006).
Under the CFTA, Africa’s long-term goal is to establish a
network of interoperable automated and standardized
customs-clearance systems that connect all participants
engaged in trade and logistics. This will enable information
to flow seamlessly—with limited manual interventions
in clearing goods—increasing efficiency while reducing
transit costs. Yet the key challenges to applying ICT in trade
are not technical, but infrastructural and institutional—as
the boxed case studies illustrate.


Most African countries have already begun introducing
ICT in customs clearance and logistics across borders, and
broadband networks and web-based applications have


increased access to trade information for businesses and
governments. But the degree of ICT use in trade facilitation
(and e-commerce) varies widely, raising concerns over the
degree of convergence required for successful integration
under the CFTA. Thus, as the last decade saw Africa focus
on building ICT connectivity and access, future policy
ought to focus on aligning ICT in trade among countries
and regions as an engine of structural transformation.


The power of e-commerce


Africa’s next growth frontier


Industry experts point to e-commerce as the next frontier
in global expansion, with developing markets, largely
in Asia, Latin America and the Middle East, having the
greatest potential for growth (AT Kearney, 2012).23 Global
e-commerce has grown 13 per cent a year over the past
five years, and sales are expected to surpass US$1.25
trillion in 2013. This growth can be attributed to the
progression of enabling ICT infrastructure, regulatory
frameworks and evolving consumer preferences.


The number of internet users is also forecast to grow—
from around 2.2 billion at the close of 2011 to some
3.5 billion within the next decade (IMRG, 2012).
Likewise, e-commerce through mobile devices is
projected to reach US$730 billion in the next five
years (Juniper Research, 2012).


In major developed countries, domestic and cross-border
retail is expanding through online channels as retailers
invest less in traditional brick and mortar outlets (box 5.1).
Such multichannel approaches are a novelty to most African
markets, where the regulatory and ICT framework for
e-commerce is still in its infancy, if existing at all. Progress
is hampered by a lack of consumer trust, limited variety in
inventory, and weak ICT and distribution infrastructure—
which are critical ingredients for e-commerce retail.


The enabling framework also covers encryption and
decryption; data confidentiality and security—for example,
to process online payments (which also involves financial
regulators); digital signatures, electronic contracts and




44


other forms of consumer protection; and protection
for intellectual property rights (ECA, 2005). High
levels of informality (accounting for 20–75 per cent of
employment in some African countries) also constrain
the growth of structured retail and the use of ICT in doing
business (AU and ECA, 2010; Blades, Ferreira, and Lugo,
2011).


Africa-wide initiatives


African ministers responsible for ICT adopted the Tunis
Declaration on Electronic Commerce for Development
(2003), which recognizes ICT and e-commerce as powerful
tools in productivity and trade. The ministers agreed to:


• Formulate and implement national and regional
e-strategies and plans of action to develop ICT,
e-business infrastructure and the environment.


• Integrate ICT and e-commerce strategies into
national economic development plans.


• Adopt legislation to create a secure legal environment
for electronic transactions, which is critical given
e-commerce’s rapid technological changes.


• Promote the use of e-commerce by firms to enhance
efficiency and competitiveness.


The Tunis Declaration’s objectives complement Africa’s
Information Society Initiative (1996), the African
Regional Action Plan on the Knowledge Economy (2005)
and the AU/NEPAD African Action Plan (2010–2015):
Advancing Regional and Continental Integration
in Africa. The latter calls for African governments
to each deploy at least one flagship programme in
e-government, e-education, e-commerce and e-health
by 2015. PIDA has committed to developing an enabling
environment for completing the regional fibre-optic
and backhaul infrastructure and for installing internet
exchange points in countries without them. Each
country will connect with at least two submarine cables
in order to expand broadband capacity.


Selected regional initiatives


Some regions have begun taking steps in line with the
above initiatives. For example, ECOWAS ministers adopted
the Supplementary Act on Cyber Crime (2008), a model
ICT framework and an act on e-commerce, to fill the gaps
in data protection. With World Bank support, ECOWAS has
launched an integrated payment system and strengthened
the regulatory framework for cross-border payments.


In the SADC region, work on ICT initiatives began in the
1990s. Most recently, following a review process supported
by the ECA, ministers responsible for ICT approved the
SADC e-commerce Strategic Framework (2012) as part
of a broader “e-SADC” strategy. The Strategic Framework
seeks to promote regional trade through e-commerce,
focusing on harmonizing regulatory frameworks and trade
facilitating infrastructure, supporting conducive business
environments (at the national level) and building trust and
confidence in the system’s security among consumers and
businesses. One proposal under the framework is to set
up an SADC e-commerce observatory made up of focal
points from each member State to coordinate and drive the
e-commerce agenda while monitoring e-commerce flows
on a quarterly basis (USAID, 2012a; ECA, 2012a).


The EAC Common Market provides opportunities to
develop long-term, vibrant e-commerce among the five
partner states. The EAC adopted a regional e-government


Box 5.1


EU approaches


With its 60-year history of incremental integration
towards a single economic space, the EU can provide
useful pointers for African RECs on developing
successful regional approaches to e-commerce.


The EU Single Market Act and the Digital Agenda for
Europe recognize that information-society services
such as e-commerce are key to boosting economic
growth in the 21st century. By 2015, the bloc aims to
have 33 per cent of small and medium-size enterprises
conducting online purchases and sales and 20 per cent
of the population buying goods on line (up from 9 per
cent in 2010) from cross-border providers.1


E-commerce is a key tool for transcending national
borders, giving EU consumers and firms access to a
broader range of goods and services. The EU adopted
the Internal Market Directive on Electronic Commerce
in 2000. The directive aims to boost cross-border
e-commerce (which stood at 4 per cent in 2010) and to
provide legal certainty for online commerce vendors
and consumers. Legislation was added on data
protection and consumer affairs—to avoid having to
constantly make amendments in the rapidly changing
world of e-commerce. The legislation harmonizes
certain information requirements, electronic
contracting and liability for online intermediaries, but
it does not cover taxes, online gambling, standards
for goods, conditions for delivery or the transport of
goods purchased on line.


Note: 1. European Commission (2012).




45


programme in 2006 (as part of a broader EAC development
strategy) with support from ECA, aimed at using ICT
to accelerate public service delivery and e-commerce
(UNCTAD, 2012). Improved fibre-optic links to the region
have slashed costs and increased bandwidth over the last
decade. Subject to an enabling legal framework, this opens
up immense possibilities for e-commerce (including cross-
border trade) and other ICT-enabled activities in the region.


One of EAC’s key challenges has been to harmonize
member States’ divergent cyber legislation and initiatives
around themes such as electronic transactions and
signatures, data and consumer protection. A second phase
of reforms will look at issues such as intellectual property
rights, competition and taxation.


Experience in East Africa has shown that sustained ICT
reforms require committed resources, local ownership
and a dedicated lead agency to constantly mobilize and
coordinate stakeholders. Developing a critical mass of
policy expertise is critical for advancing policy measures
and regulations in line with international best practice.
The need to build capacity is therefore continuous. The
experience also shows that developing an e-commerce
business in Africa presents unique challenges not seen
in more mature markets (Koutonina, 2013). For example,
the business model that has allowed e-businesses like
Amazon and eBay to thrive would not work in many African
countries, where key ingredients like consumer trust, sound
electronic payments systems, adequate inventory, and solid
distribution and warehousing are missing.


Most policy discussions on e-commerce in Africa emphasize
the missing infrastructure, including backbone ICT, payment
systems and distribution services (Murray, 2012). But policy
makers must also understand how to develop a “market”
that can incubate and sustain viable e-commerce. This
market includes a middle class of 313 million Africans—
those living on US$2–US$20 a day (AfDB, 2011). Based on
an analysis in comparative markets,24 the typical consumers
engaged in e-commerce earn at least US$800 a month,
which is out of reach for most Africans, including some
classified as middle class under the above definition.


Still, there remains some degree of optimism for the long-
term. While industry figures vary, Nigeria’s e-commerce
sales are expected to double by 2014—having grown 25
per cent from N49.9 billion (US$305 million) in 2010 to
N62.4 billion (US$381 million) in 2011. The government
forecasts that roughly 6.2 million e-commerce-related jobs
will be created by 2015. Online retail sites such as DealDey,
Konga, Jumia.com and Nigeria’s own eBay, Kaymu, have
emerged despite limited ICT infrastructure, relatively small
structured retail and a large informal sector. DealDey


and Konga eventually established their own distribution
systems using motorbikes and sourced IT support from
outside the country. To combat the risk and lack of trust
in online retail, Konga has opened several “pick-up stores,”
where customers can call in to order and pick up. Similarly,
Jumia.com, which recently entered into a strategic
partnership with mobile giant MTN, opened more than two
dozen “cash-on-delivery centres.” On the other side of the
continent is another success (box 5.2).


In January 2013, the Kenyan government launched the
first phase of the 250-acre Konza Technology City, outside
Nairobi. Konza Technology City is expected to create more
than 20,000 IT jobs by 2015 and around 200,000 jobs by
the time it is complete in 2030. The 20-year project forms
part of Vision 2030, aimed at positioning Kenya as East
Africa’s technological hub. It will be developed as a PPP
and is expected to attract major global IT companies and
incubate local IT start-ups. The goal over the next decade is
for ICT-enabled services to contribute at least 25 per cent of
Kenya’s GDP. Kenya’s ICT entrepreneurs have been urged to
move from relying on grant funding towards approaching
venture capital and other financiers with profitable
business models. To develop a pool of highly skilled IT
professionals, three of Kenya’s leading universities have
partnered with IBM to improve advanced training courses
for IT engineers and for areas such as analytics, cyber
security, social business and cloud computing. The national
strategies undertaken by Kenya might provide lessons for
countries interested in promoting ICT-enabled growth.


Gradual growth in household income, consumption and the
use of social media in Africa has created a nascent market
for e-commerce in the long term. Trust in structured online
retail services in some jurisdictions is likely to gradually
increase, as is demand for e-commerce among Africa’s


Box 5.2


Shoppers.co.ke


Launched in 2011, shoppers.co.ke is lauded as a
breakthrough for e-commerce that is tailor-made for
urban Kenyan internet users looking for anything from
IT to clothing and accessories. Most of the inventory is
sourced from local distributors.


The website provides all the essentials of an
e-commerce retailer, including a shopping cart,
checkout, a secure payment gateway via PesaPal and
an order delivery system. In addition to major credit
cards, the website allows shoppers to pay for products
on line using mobile money accounts, including
M-Pesa, Airtel Money and YuCash.




46


youth. Yet given the large informal sector in some regions,
many African countries will have to first complete traditional
structured retail before making the leap to e-commerce.
Indeed, not until the last decade did some regions witness
the entry of large regional or international retailers, with the
policy framework often containing gaps for traditional retail,
wholesale and distribution (Dihel, 2011).


Building on continental and regional ICT objectives, RECs
should ramp up their work to build regional and member
States’ e-commerce capacity, regulatory frameworks,
and payment and logistics systems, though a culture of
e-commerce needs time to take root.


The explosive growth of mobile technology in Africa over
the past decade demonstrates the transformative power of
ICT. In 2000, Africa, excluding North Africa, had fewer than
9 million fixed lines, with penetration of just over 2 per cent
(Williams, Mayer, and Minges, 2011). By 2012, there were
more than 650 million mobile subscriptions in Africa (AT
Kearney, 2011), more than in the United States or the EU,
making Africa the world’s fastest-growing mobile phone
market (figure 5.1; Yonazi et al., 2012). Few imagined that
such demand existed, let alone that it could be afforded.


Africa’s mobile decade has inspired the continent’s
economic growth, which averaged 5 per cent in the 2000s


(AfDB et al., 2012). Between 2000 and 2008, Africa’s early
ICT reformers enjoyed an extra 1.2 per cent in GDP growth
over later reformers (Williams, Mayer, and Minges, 2011;
Waverman, Meschi, and Fuss, 2005; Qiang and Rossotto,
2009). Between 2000 and 2010, investment in ICT jumped
more than fourfold, from US$27 billion to US$122 billion,
though it later declined in North Africa due to the fallout
from the Arab Spring (AfDB et al., 2011). Improved
connectivity has made doing business easier, and today ICT
contributes around 7 per cent of Africa’s GDP—higher than
the global average.


Trade facilitation


Similar to the impact of removing tariffs and quantitative
restrictions, trade facilitation reforms can promote trade
by reducing transport and transit costs and by improving
overall competitiveness in the supply chain. One study
projected that a global reduction in waiting times at
ports or customs by one day would cut landed costs
of goods by 0.5 per cent.25 This would save developing
countries US$240 billion annually. ICT is a powerful
complement to the traditional trade facilitation measures
that deal with infrastructural and non-tariff barriers
to trade, as countries and regional trade agreements
(RTAs) around the world focus more on harmonizing and
integrating trade and transport.


Mobile phone and xed line subscriptions


20
00


0


100


200


300


400


500


600


700


0


10


20


40


30


50


60


70


80


M
ill


io
ns


Pe
r c


en
t


2000
Mobile 16.5m


2000
Fixed 9.2m


2010
Fixed 12.1m


20
01


20
02


20
03


20
04


20
05


20
06


20
07


20
08


20
09


20
10


20
11


So
ut


h
As


ia


Su
b-


Sa
ha


ra
n


Af
ric


a


M
id


dl
e


Ea
st


a
nd


N
or


th
A


fri
ca


Eu
ro


pe
a


nd
C


en
tr


al
A


sia


Ea
st


A
sia


a
nd


th
e


Pa
ci


c


La
tin


A
m


er
ic


a
an


d
th


e
Ca


rib
be


an


2011
Mobile 648.4m


Average mobile phone growth rates by region


Africa’s mobile revolution, 2000–2011


Figure 5.1


Africa’s mobile revolution, 2000–2011


Note: Regions in the right-hand chart cover developing countries only.
Source: World Bank, Wireless Intelligence and International Telecommunication Union.




47


International bodies and African
trade reforms


International bodies have developed an array of technical
instruments to support trade facilitation. Some of them are
described below.


WTO


Negotiations on trade facilitation under the Doha
Development Agenda have a narrower focus than the
development approach to trade facilitation. The WTO
negotiations are aimed at clarifying and improving
GATT Article V (Freedom of Transit), Article VIII (Fees and
Formalities Connected with Importation and Exportation)
and Article X (Publication and Administration of Trade
Regulations).


GATT Article VIII, for instance, states that: “[the] contracting
parties recognize the need for minimizing the incidence
and complexity of import and export formalities and
for decreasing and simplifying import and export
documentation requirements.” Addressing these issues will
help enhance transparency, predictability and due process
and reduce arbitrary discrimination. The negotiations are
also aimed at making provisions for technical assistance
and capacity building for developing countries to support
implementation of commitments and improve inter-
agency cooperation between trade officials.26


Although trade facilitation is one of the more active areas of
the Doha Round, African countries have expressed concern
with the idea of developing binding multilateral disciplines
on trade facilitation with the potential for disciplinary
action for non-compliance. There have also been concerns
over the unquantified costs of implementing obligations
for trade facilitation, which has led to calls for developed
countries to make binding commitments to fund
implementation activities in developing countries (possibly
as part of an “Aid for Trade Facilitation” package).


WCO


The WCO is focused on increasing efficiency in customs
administrations across the world and plays a critical role
in trade facilitation in customs procedures. The Kyoto
Convention aims to promote the global standardization
and simplification of customs procedures.27 The WCO
has developed global standards under the Revised
Kyoto Convention (RKC) for harmonized and simplified
procedures, classification of goods, and data in IT systems.
The RKC also promotes ICT in customs procedures. Some
countries are interested in incorporating the RKC’s main
principles into the binding and enforceable framework of


the WTO in areas such as transparency, predictability,
standardization and simplification of goods declarations
and supporting documents.


United Nations Conference on Trade and
Development


Since 1981, the United Nations Conference on Trade
and Development (UNCTAD) has expanded the
Automated System for Customs Data and Management
(ASYCUDA)—a computerized customs management
system that handles manifests, customs declarations,
accounting procedures, and transit and suspense
procedures. There are currently three versions (ASYCUDA
World, ASYCUDA++ and ASYCUDA v2) used in more
than 90 countries, territories and regions, including 42 in
Africa. Assisted by the French government, some French-
speaking countries opted for SOFIX—a French customs-
management software suite.


Since the emergence of commercial Windows-based
software and with cheaper bandwidth, countries can
now develop in-house systems, outsource development
to a third party or acquire an existing system like
ASYCUDA from the market. Kenya, Mauritius, Senegal
and South Africa have opted for customized solutions
(discussed later in this chapter).


UN Centre for Trade Facilitation and E-business


The last in this short list—the UN Centre for Trade
Facilitation and E-business (UN/CEFACT)—is a key
player in promoting harmonization and automation of
customs procedures, as well as information requirements
using international standards for transport and trade
facilitation. It has made 35 recommendations on transport
and trade facilitation, including recommendations 33 and
35 on the establishment of a single window.28


African trade reforms


The first generation of trade reforms—measures to
ease border restrictions to merchandise trade and
to liberalize foreign exchange markets—are under
way in most African countries. The next phase is to
address the complex, behind-the-border measures.
At a technical level, the global experience of ICT in
trade facilitation centres largely on the development
and implementation of national single window (NSW)
principles, which enable data to be shared among
traders and government and private sector actors.
Africa’s experience with NSW principles is gradually
increasing, augmented by the roll-out of ICT in border
and port operations.




48


Some countries like Rwanda are making progress in
establishing NSWs, integrating domestic agencies and
stakeholders. The World Bank’s Doing Business (2013) found
that 71 countries have introduced NSWs. Of these, 18 have
a NSW that links all relevant government agencies, while 53
have a system that does so partially. The ultimate objective
should be to form a regional single window system
(box 5.3; see Koh Tat Tsen, 2011).


Technology provides only a partial solution, of course, and
must be backed up by reforms to inefficient or complex
customs procedures. Regulations on data management,
confidentiality, access and distribution are also vital. The
legal framework, too, is important for structuring and
operating national or regional single windows, in order
to safeguard data transparency and security. The United
Nations Commission on International Trade Law has
prepared conventions, model laws and legislative guides
that can help African countries and regions make rules for
trade facilitation. It also offers technical assistance.


Issues specific to LLDCs


During 1960–2000 LLDCs registered slower per capita
income growth than their coastal neighbours and were
characterized by low participation in regional and global
trade. According to the World Bank, being landlocked adds
roughly four days to the time for exports to reach a port
and around nine days for imports. Transport costs to ship
a container measured on six corridors from a developed
country port to an LLDC averaged about US$4,500, roughly
20 per cent more than from coastal countries (World Bank,
2008). Landlocked distance has a steep cost (box 5.4).


The Almaty Ministerial Conference (2003) was one of the
first multilateral initiatives aimed at addressing the trade
facilitation and transport challenges facing LLDCs—16
of which are in Africa (UNESCAP, 2011). The conference
adopted seven objectives, which include securing access
to and from the sea; reducing transport costs as well
as loss, damage and deterioration of cargo en route;
and improving competitiveness and transport safety. It
also adopted an implementation programme of action
highlighting five priority areas for landlocked and transit
countries. Development partners responded by scaling up
support and technical assistance for corridor and transport
infrastructure projects, as well as customs and trade
facilitation reforms, including transit systems. The World
Bank reports that since the Almaty Conference, the export
performance of LLDCs improved 24 per cent in each year,
more than the 19 per cent for transit countries.29


Most countries begin by trying to address cumbersome
procedures, rent seeking, trucking and logistics services


Box 5.4


DHL Global Connectedness Index


The 2012 DHL Global Connectedness Index examines
global connectedness at the industry level across
140 countries, finding that distance and borders
matter, even online. But there has been progress:
during 2005–2011, and despite being in the least
connected region, African countries enjoyed the
greatest average gains in connectedness, driven by
trade growth. Top performers included Ghana, Guinea,
Mozambique, Togo and Zambia. By comparison, North
Africa and countries like Botswana, Burkina Faso,
Burundi, the Central African Republic and Rwanda
saw their rankings fall, due largely to little regional
integration or being landlocked. The index argues
that all countries have the potential to improve
their attractiveness to foreign direct investment
and competitiveness if they address their transport
infrastructure and regulatory framework.


For more information, see www.dhl.com.


Box 5.3


The Association of Southeast Asian Nations
Single Window


The Association of Southeast Asian Nations (ASEAN)
Single Window is one of the first attempts at regional
connectivity, which will develop and interconnect
NSWs by 2015 to allow the clearance of goods
through a single submission. USAID is supporting
ASEAN countries in developing an application for
processing ASEAN certificates of origin—a model
for harmonized data and documentation—and in
assessing the readiness of national legal frameworks
to accommodate the Single Window. While the
hardware and software components are fairly
straightforward, the supporting legal reforms are
more complex—and expected to take more effort
and time to implement.


For more information, see http://advanceiqc.com/category/


advance/asw.


in the transit/coastal country, whose impact reverberates
on the LLDCs and distorts the supply chain. More efficient
and lower cost transit will help both the transit country
and neighbouring LLDCs. Designing and implementing
efficient regional transit regimes across the continent is
thus a priority. In addition to road transport, LLDCs need




49


to be supported in rail and air freight, through regional air
hubs for example.


Several UN organizations, such as the Economic and
Social Commission for Asia and the Pacific, have designed
methodologies to measure corridor performance and
demonstrate the costs and benefits for coastal countries
providing transit services. They have also conducted
diagnostic audits of facilitation problems in both LLDCs and
coastal countries. These tools have been used to prioritize
transit reforms.


Still, gaps remain in Africa. Despite the existence of regional
transit agreements, the continent labours under weak
institutional capacity. The involvement of multiple agencies
and development partners leads to a range of diverse and
sometimes conflicting approaches to facilitation, which
must be addressed through coordination.


RTAs


By 2010 more than 120 RTAs included provisions on
trade facilitation—but with wide variation in scope,
depth and detail (UNCTAD, 2011). Initially, such
provisions were included within general principles on
customs procedures (which have changed), but the
scope of trade facilitation has since expanded to include
transparency, simplification and harmonization of trade
documents, as well as better coordination between
government agencies and the private sector. Figure 5.2
provides a breakdown of trade facilitation provisions
appearing frequently in RTAs, based on an analysis of
118 RTAs.


The provisions on trade facilitation found in RTAs are
included rarely as enforceable commitments but usually
as a programme of action. Comprehensive provisions on
trade facilitation are typical in RTAs involving developed
countries such as the United States and its agreements
with third countries, the Japan-Singapore Economic
Partnership Agreement and agreements within ASEAN
(UNCTAD, 2011).


Trade facilitation is addressed in the interim Economic
Partnership Agreements between the EU and the
five African groups. Their focus is on harmonizing
customs legislation, regulations and procedures;
mutual recognition of authorized economic operators
such as the US Customs-Trade Partnership Against
Terrorism; customs modernization; ICT deployment; and
international transit in accordance with international
standards, for example, under the RKC. The agreements
encourage improved transparency in making information
available (in accordance with GATT Article X). They also
emphasize cross-border and bilateral cooperation, with
(non-binding) provisions on EU support to help African
customs administrations effectively implement their trade
facilitation commitments.30


RTAs are increasingly incorporating WCO- and WTO-type
trade facilitation measures and principles from the RKC
on simplified and harmonized customs procedures. Such
internationally agreed benchmarks can provide useful
convergence criteria between the RECs in pursuing the
CFTA. Moreover, there is clear evidence of increasing
convergence between regional provisions on trade
facilitation and various multilateral principles driven by


0 20 40 60 80 100


ICTs, single window, automation, paperless trade


Release of goods


Use of international standards


Transit and temporary admission


Express shipment


Fees and charges


Customs clearance and facilitation


Cooperation, information, exchange and technical assistance


Publication and enquiry points


Advance rulings


Risk management


Per cent


Figure 5.2


Breakdown of WTO-type trade facilitation provisions in RTAs


Source: UNCTAD analysis, 2011.




50


the WTO, WCO and UN/CEFACT. Both the Southern African
Customs Union and SADC agreements, for example, call
for non-discriminatory treatment of vehicles transporting
goods in transit.


Two regions’ experiences


The following subsections highlight the experiences
of two regions.


Asia-Pacific Economic Cooperation


The 21 member economies of the Asia-Pacific Economic
Cooperation (APEC) account for 54 per cent of global GDP
and 44 per cent of world trade (WTO, 2012). Over the
past two decades, the region has enjoyed an average of
10 per cent growth while cutting average applied tariffs
from 16.9 per cent to 5.8 per cent (WTO, 2012). APEC has
seen some success in organizing regional trade facilitation
initiatives for its members under the Osaka Action Agenda
(1996). A key objective is using new technology to achieve
shorter clearance times, lower costs and increased
business efficiency.


Under the Trade Facilitation Action Plans (TFAP I and
II), APEC has sought to better focus and coordinate its
trade facilitation work. By the end of TFAP I in 2006, APEC
economies had managed to complete 62 per cent of
more than 1,400 targeted trade facilitation actions and
measures. At least 17 economies were also involved in the
APEC Business Travel Card Scheme, which extends visa
exemptions to business travellers from partner countries.31


TFAP II aimed to further reduce transaction costs by 5 per
cent between 2007 and 2010, with a revised menu of
trade facilitation actions for member economies and a
critical focus on providing capacity building and technical
cooperation to support implementation within APEC’s least
developed countries.


Latin America and the Caribbean


Trade facilitation reforms are a priority in Latin America
and the Caribbean,32 as seen in free trade agreements and
strengthened market arrangements.33 Close to half the
27 member States of the Latin American and Caribbean
Economic System have implemented or are implementing
NSWs. The region is also working on a digital system for
signing and transmitting certificates of origin to provide
greater security against fraud. Regional agreements on
mutual recognition of authorized economic operators
help facilitate efficient transit formalities relying on the
certifications made by the customs of origin, thereby
safeguarding the security of the cargo while circumventing
the need for double customs control.


Several gaps have been identified in the region’s trade
architecture—which are relevant for African countries.
For example, the inventory of member States’ progress
in implementing trade facilitation reforms needs to be
updated and placed in a regional context. Capacity-
building needs, lessons learned and best practices in
regional cooperation also need to be systematically
captured— also relevant for African countries.


Measuring progress in trade facilitation


Three international indexes on trade facilitation
(described below) can help guide reforms in Africa.
Moreover, African governments can learn valuable
lessons from strong performers like Mauritius, a good
model for their own regulatory reforms (box 5.5).


Doing Business


The World Bank’s annual Doing Business report provides
a reasonable measure of business regulations in 185
economies using 11 indicators.34 The report’s “cross-border
trade” indicator is relevant for measuring a country’s
performance in trade facilitation across key fundamentals
like time, cost (excluding tariffs) and number of documents
and procedures involved in importing and exporting. Doing
Business also examines logistics criteria such as the time
and cost of inland transport from the port. In the 2013
edition, one-third of the 50 economies with the greatest
improvements since 2005 are from Africa, though several
African countries still score poorly on some indicators.


Over the last decade, the report notes that the most
common features of trade facilitation reforms in all regions
were (in order of importance) introduction or improvement
of electronic submission and processing of customs
declarations (110 economies); improvements to customs
administration (61 economies); improved port procedures;
and improvements to risk-based inspection systems
(especially in Latin America and the Caribbean, APEC and the
Organisation for Economic Co-operation and Development).
These areas are where African countries need to further
improve in order to enhance their competitiveness.


Global Enabling Trade Report


The World Economic Forum’s Global Enabling Trade Report35
measures the quality of economies’ critical physical and
soft infrastructure for enabling trade and identifies areas
for improvement. It has become a crucial reference tool
for measuring national competitiveness and influencing
investments decisions. It profiles 132 economies using the
Enabling Trade Index and includes a survey of business
executives identifying the most problematic export and




51


import areas out of a list of 10. The index looks at tariff
issues, non-tariff barriers, customs services, time taken to
export and transport infrastructure.


The report also looks at economies integrating into global
value chains, identifying supply chain constraints and
domestic governance reforms that can propel countries
beyond their current reliance on preferential trade
arrangements towards sustainable competitiveness in
the global economy. Top-performing countries typically
demonstrate high levels of transparency, due process,
an enabling business environment, efficient border
administrations and developed infrastructure.


The 2012 report identifies a high degree of diversity for
enabling trade among North African countries, with Tunisia


ranking highest at 44 and Algeria remaining at 120. Key
challenges for this region include restrictive trade policies
and business environments and poor regional connectivity.
Trade liberalization in recent decades has failed to
substantially improve the trade performance of Africa as a
whole. Despite enjoying trade preferences in several key
markets, major improvements in trade facilitation have
yet to be realized. It thus remains much more expensive to
trade with Africa than with other regions.


Logistics Performance Index


Logistics services are a critical component of trade facilitation
and the mainstay of global trade. They involve freight
transportation, warehousing, border clearance and payment
systems (among other operations). Logistics encompass


Box 5.5


Emulating Mauritius


SADC ICT officials met in Mauritius in October 2012 to
develop a SADC Customs ICT Strategy that would prioritize
and harmonize regional ICT activities in accordance with
the SADC Protocol on Trade. This represents a shift from
the current regime, which comprises national or bilateral
initiatives in customs modernization and e-commerce.
The meeting involved a study tour to allow SADC officials
to learn from the experience of the Mauritius Revenue
Authority, which has successfully implemented such ICT
initiatives as an NSW, an electronic certificate of origin,
a cargo community system, a customs enforcement
network and a paperless environment. As part of
government reforms and technological modernization
aimed at reducing the cost of doing business, aligning
with international best practices and positioning the
island as a major trans-shipment hub between Asia–Africa
and Asia–Europe, the Mauritius Revenue Authority was
established in July 2006 to amalgamate the previously
separate departments of customs, large tax payers,
income tax and value-added tax.1


The automation of customs was initiated in the early
1990s through the introduction of ASYCUDA and
subsequent implementation of a Customs Management
System (including risk management) under the Tradenet
project. Tradenet is a single window network that allows
traders, customs brokers, shipping agents and freight
forwarders to submit declarations to customs without
the requirement of physical copies, within a 15-minute


timeframe. The system has evolved over the last two
decades, and today Mauritius provides for electronic
submission of the customs declaration and bill of lading,
thus speeding up trade process. The government
established a Committee on Trade Facilitation under
the Ministry of Foreign Affairs, International Trade and
Regional Cooperation—whose work was guided by
legislative changes relating to trade facilitation as a
result of accession to the RKC in 2008. At the same time,
the government set about eliminating import quotas,
non-tariff barriers and customs duties on approximately
87 percent of tariff lines. Despite the tariff reductions,
overall revenue collection (especially value-added tax at
import and excise duty) growth remained above target
over the last few years. Today, Mauritius performs better
than average upper middle-income countries and the
rest of Sub-Saharan Africa in information availability,
advance rulings, appeal procedures, harmonization and
simplification of documents, automation and internal
border agency cooperation.2 Political will has been a
key ingredient to success. Meanwhile, a major threat
to the reform process was the fear of job losses due
to automation and limited financial resources against
a need for extensive capacity building and purchase
of equipment, structures and software. Therefore, the
government had to engage staff representatives and
trade unions throughout the change process, while
using technical assistance from development partners
like UNCTAD and the government of Singapore.


Notes:
1. Rajcooar (2011).
2. OECD (2013).
Source: USAID (2012a).




52


private service providers (acting on behalf of traders) and
government agencies at ports and customs, among others.
The World Bank’s Logistics Performance Index, which comes
out every two years, is based on a global survey of transport
operators and freight forwarders and measures effectiveness
of logistics. The index also provides quantitative data on
the performance of six critical elements within the logistics
chain in 155 countries. The index allows policy makers to
measure a country’s improvements in logistics over time.
Developed countries continue to hold the top rankings in the
2012 edition, while 8 of the bottom 10 countries are in Africa,
underlining the challenge still ahead.


ICT, automation and trade
facilitation in Africa
The automation of customs administration dates to the
1980s, when the first ICT applications expedited clearance
and transit. It also enhanced security in the clearance
process while increasing revenue collection rates. In recent
times, networked ICT has become more integrated with
trade facilitation. Given that ICT allows data to be stored,
it is important in trade facilitation for the following three
reasons (Yonazi et al., 2012):


• It enhances efficiency by reducing human interfaces,
eliminating delays and the scope for corrupt
interactions between traders and officials.


• It improves coordination among various agencies and
customs administration involved in the trade process,
especially national and regional government agencies.


• It expands the quality of information available to
the private sector on trade processes and targeted
markets, allowing them to mitigate risks in market
entry and to manage shipments more efficiently.


Today, ICT is deployed in African trade facilitation
initiatives, predominantly in customs automation
and various aspects of the supply chain. This includes
consignment tracking and port management in
countries with major seaports, such as Kenya,
Senegal and South Africa. Newer customs automation
programmes seek to increase emphasis on paperless
trade supported by data exchanged using single
windows, as well as to incorporate online payments.


Integrated management and
single-window systems


International border posts, ports and airports are
multifaceted communities that bring together customs,
immigration, quarantine and security agencies, shipping


lines and agents, freight forwarders, brokers, port
authorities and transport operators.


Customs and related border procedures are at the
heart of the transit process and key to the relationship
between ICT and trade facilitation. Clearance procedures
were once conducted manually—and still are at many
African border crossings. However, ICT has enabled these
processes to be coordinated electronically, increasing
efficiency while reducing delays and costs.36 It has
also reduced the need for human interactions and the
chance of human error or corruption. Ideally, the RECs
should operate as a single homogenous space (with no
internal borders in the case of customs unions). However,
various considerations (such as security) necessitate the
retention of borders in some conflict-prone regions.


According to a USAID survey (2012b), 58 per cent of
border delays are due to poor inter-agency collaboration.
As a response in East Africa, for example, with USAID
support, countries have initiated reform by forming JBCs
consisting of various government agencies and private
sector operators responsible for clearing goods on one
side of the border. The stakeholders meet regularly to try
and resolve issues. These JBCs are forerunners of more
sophisticated integrated cross-border management
mechanisms, but they provide a useful operational
platform for like-minded development partners to train
government and private sector officials and to kick start
reforms such as the implementation of a code of conduct
for clearing and forwarding agents, simplified certificate
of origin applications and OSBP legislation.


Integrated cross-border management involves ICT-
enabled data sharing and coordination among the
customs, immigration, quarantine and security agencies
on both sides of a shared border, and Africa is showing a
growing trend in this direction, especially with OSBPs.


As stated above, the key innovation in global trade
facilitation is the gradual integration of regional
countries’ systems within an NSW. Migration towards an
NSW typically begins with a common data-gathering
and -sharing approach for single-window processes,
maturing over time to cover key areas along the supply
chain and culminating in a fully integrated system
(boxes 5.6 and 5.7).


Transport corridors (table 5.1) are integral to trade
logistics for both landlocked and coastal countries
(Teravaninthorn and Raballand, 2009). Yet Africa’s
foremost transport corridors still have high costs to move
cargo to and from the ports, especially for LLDCs. Apart
from poor infrastructure, multiple inspections lead to




53


Box 5.6


Case study on the Kilindini Waterfront Automated Terminal Operating System


Before KWATOS After KWATOS
Manual documentation for cargo clearance and manual
intervention by regulatory agencies.


Electronic documentation (paperless environment) requiring
less physical displacement, use of pick-up orders for import and
pre-advice for exports. Electronic intervention by regulatory
agencies through KPA web portal.


Use of stand-alone internal systems requiring dispatch of
manual papers between operations and finance leading to
insecurity in the documentation process.


Interface of KWATOS and SAP’s internal systems leading to fast,
efficient and secure documentation processes.


Manual exchange of documents between regulatory agencies
leading to delays and corruption.


Integration of KPA and stakeholder systems allowing for the
exchange of electronic messages.


High cost in documents’ security features. Cost reduction with paperless environment—more secure.


Manual and laborious container inventory recording. Automatic, accurate and real-time update on container
location—faster turnaround.


Inefficiency of operation planning and procedures based
heavily on manual systems.


Adequate planning and real-time operation allow for
operational efficiency, increased throughput and shorter cargo
dwell time.


Ship turnaround time averaged three days. Ship turnaround time cut heavily.


Truck turnaround time averaged 12 hours. Truck turnaround time averages four hours.


Note: 1. International Harbour Masters Association (2010).
Source: Kenya Ports Authority, Kilindini Waterfront Project (2010).


Changes in Mombasa Port due to KWATOS


The Kilindini Waterfront Automated Terminal Operating
System (KWATOS) is an NSW run by the Kenya Ports
Authority (KPA). KWATOS is designed to automate key
port operation areas, including container, conventional
cargo and marine operations, and inland container
terminals in Nairobi and Kisumu. The initiative began
in 2005 when Total Soft Bank Ltd from the Republic
of Korea—a company specializing in developing and
operating port management and planning software—
was contracted. KWATOS became operational in 2008.1


To run KWATOS well, the KPA has trained more than 2,000
people, including more than 900 clearing and forwarding
agents, more than 500 container terminal personnel and
300 conventional cargo staff.


Challenges


Some of the key challenges in getting KWATOS up and
running include:


• Migration from SAP to KWATOS. Before KWATOS, the
port was using SAP, a financial billing system that
lacked the ability to track movements of cargo in
and out of the port. Data had to be uploaded to
the new KWATOS system, leading to duplication
and errors that required a system clean-up. This
prevented users from lodging documents for a time.


• Staff learning. Staff at KPA had difficulties adjusting
to the new system.


• External user adaptation. External users had
difficulties adapting to lodging documents
electronically.


• Information from shipping agents. Shipping lines are
expected to lodge electronic documents through
KWATOS, including manifests, delivery orders and
storage plans. However, shippers had a hard time
adhering to the submission deadlines.


• Integration with customs systems. KWATOS’s success
relied on full integration with the Kenya Revenue
Authority customs management system. Full
integration of the two systems is critical for fully
benefitting from automation. The systems have
yet to be fully integrated, and there are too many
manual interventions, leading to delays.


• Network instability. The system relies on the stability
of internet and wireless networks, as it is depends
heavily on accurate information on “yard” inventory.
Poor network stability has been a constant challenge.


Benefits


Despite its early teething problems, KWATOS has allowed
for faster and more efficient processes, including faster
delivery of cargo and reduced cargo dwell time, fewer
displacements and resources required from port users,
and enhanced efficiency of port infrastructure and
human resources (box table).




54


Box 5.7


Case studies on NSWs in Ghana and Mozambique


Ghana was the first African country to launch an NSW.1


Aiming to become a gateway to West Africa, Ghana
undertook an institutional audit in 1998 that identified
a host of constraints in clearing goods. Customs
regulations involved numerous and cumbersome
procedures, causing clearance delays. Frequent human
interactions resulted in many errors in import entries and
provided fertile ground for corruption.


The response—in 2002—was to set up an NSW
managed by Ghana Community Network Services
Limited (GCNet), an incorporated PPP with shareholders
that include Ghanaian customs, the Ghana Shippers’
Council and private banks. The system is based on the
Singapore model and has similarly been deployed in
Madagascar and Mozambique. GCNet operates two
integrated systems: the Ghana Customs Management
System and the electronic trade portal Ghana TradeNet.
GCNet connects all parties involved in processing trade-
related documents through an electronic platform.
On the capacity-building side, it supports customs
modernization, training for the system’s users among
government and private sectors, and improvement of
data management and revenue reporting.


The system was rolled out gradually, beginning at
Kotoka International Airport and customs headquarters,
followed by Tema Port, the Aflao border and Takoradi
Port in 2003. Today the system handles 98 per cent of
declarations. The new system allows traders to clear
goods through a single electronic submission 24 hours
a day, seven days a week. Entries are verified through a
centralized platform, which also provides a risk profile
and continuous monitoring of consignments.


The automated system has resulted in improved trade
statistics, as well as greater transparency and efficiency.
Government officials report that in the automated
system’s first year, customs revenue grew almost 50 per
cent, with a substantial reduction in clearance times
owing to less paperwork and fewer human interactions.
Revenues have averaged annual growth of 23 per
cent due to reduced corruption and greater efficiency.
Clearance times at Kotoka International Airport fell to
1 day from 2–3 days before the NSW, while clearance
times at Tema and Takoradi Ports fell to 1–3 days from
2–3 weeks. Infrastructure upgrades have also vastly
improved working conditions.


Mozambique launched its own NSW in December 20112
and is sharing its experiences with other countries,
including Botswana, Namibia and Malawi. Mozambique’s
customs reforms followed a diagnostic study in 2004 and
study visits by customs officials to Ghana and Mauritius.
The Mozambique Community Network (MCNet), which
operates the NSW, is similarly a PPP, whose mandate
is to facilitate international trade and enhance the
business environment through innovative solutions. Like
GCNet, under the NSW, MCNet offers two systems for
the exchange of information between private users and
government entities, with submissions and responses
sent simultaneously and automatically except where
human interaction is required.


The systems were developed for an investment of US$15
million. The Mozambique TradeNet server is an ICT
platform that allows information sharing among parties,
including to terminal operators; and the Mozambique
Customs Management System is a computerized system
for processing goods-clearance operations. Users can
electronically submit goods manifests and customs
declarations 24 hours a day, seven days a week, while
validation is done automatically.


The NSW provides a useful monitoring tool for customs
and an integrated database of more accurate trade
statistics. It also allows for an Integrated Risk Assessment
Module for customs, automatic clearance of goods, and
payment of any applicable duties and taxes through
banks connected to the system. Implementation of the
NSW has reduced the time and cost involved in clearance
while removing the need for government officials to
travel to where the goods are stored. The new system
has the capacity to process 400,000 customs declarations
per year, or about 1,500 a day.


Mozambique’s case is noteworthy given the formidable
infrastructure challenges at remote land borders.
Resistance to change from certain stakeholders had to
be surmounted3 as the new NSW requires specialized
training for change management for all stakeholders over
18 months. In addition, legislative reforms were necessary
to ensure data security and privacy and to make possible
the electronic submission of customs declarations and
related processes. The integrity of the ICT platform
was also critical, with data security provided through
selected restrictions on user access rights, confidentiality
agreements, high-security firewalls and data encryption.


Continued




55


Mozambique plans to incorporate additional services
to provide for international data exchange. This is
important given that Mozambique is a transit country to
Malawi, South Africa, Swaziland, Zambia and Zimbabwe.
The NSW was designed to improve revenue collection


by reducing the revenue leakage that occurs in transit.
Special features of the NSW include GPS tracking and
management of consignments in transit, as well as
automatic detection of breaches in the consignment
integrity along transit corridors.


Notes:
1. See www.gcnet.com.gh/home. See also UNECE and UN/CEFACT (2006).
2. See www.mcnet.co.mz.
3. See UNECE (n.d.).
Source: Based on presentations made by GCNet and MCNet at the USAID/WCO Southern African regional conference, “21st Century Trade
Facilitation Tools: Increasing International Competitiveness,” 10–11 September 2012, Johannesburg.


Table 5.1


Development corridors in SADC


Corridor and selected ports Market structure Trucking characteristics


West Africa (Abidjan, Tema,
Lomé, Cotonou, Dakar)


Strong regulation using freight bureaux and shippers’ councils.
Many small seaports


Poor transport and safety, old
vehicles, low prices


Central Africa (Douala) Region with the least transport infrastructure. About 80 per
cent of people and goods are transported by road, but asphalt
roads account for less than 20 per cent of the regional road
network. Limited port capacity contributes to high freight costs,
and transit can be up to 80 per cent of the total delivery period


Trucking cartels prevalent, low-
quality service, high prices


East Africa (Mombasa, Dar es
Salaam, Djibouti)


Competitive and mature market Big trucking firms account
for roughly 20 per cent of the
market, with modern fleets and
lower prices


Southern Africa (Durban,
Maputo, Beira, Walvis Bay)


Most advanced region for regulatory framework and efficient
logistics. Competitive market and slightly better controls on
loads


Convergence towards
harmonized rules, modern fleets
and low prices


Source: Teravaninthorn and Raballand (2008).


Box 5.7


Case studies on NSWs in Ghana and Mozambique (continued)


long delays and add to transport costs.37 Key ports such as
Durban (South Africa), Lagos (Nigeria), Mombasa (Kenya)
and Tema (Ghana) experience congestion amid growing
container traffic volumes, estimated at 7–14 per cent a
year. The lack of a coordinated and regional approach to
trade facilitation and transport, weak implementation
of harmonized and coordinated border procedures, and
poor risk management and controls are just some of the
obstacles to be overcome.


ICT can help remove trade barriers along transport
corridors in various ways. For example, advance information
on shipments (coupled with tracking processes) eliminates
the need for multiple inspections. Box 5.8 describes how
ICT is used along the Trans-Kalahari corridor.


As box 5.9 illustrates, tracking systems along corridors
also help focus limited inspection and control resources,
resulting in fewer delays for transit cargo. Officials are able


to use targeted intelligence-based inspections in place of
random or universal examination of consignments.


ICT in evolving payment systems


Trade transactions and related shipping and clearance
processes require an efficient payment system.
Payments include transactions between the buyer and
seller (which may involve letters of credit); between the
seller and various private intermediaries who arrange
shipment, clearance and insurance of the goods; and
to government agencies for customs duties, bonds and
other charges.


Inadequate payment systems create bottlenecks and raise
transaction costs for other activities along the supply
chain. Bank charges can be fairly hefty, for example,
where currencies are not freely convertible or manual
systems are involved (AU and ECA, 2010). ICT can be a




56


Box 5.8


The Trans-Kalahari Corridor e-customs and e-trade pilot project


The Trans-Kalahari Corridor is one of the key arteries
for regional integration in Southern Africa. It provides a
1,900 km link between the Port of Walvis Bay, Namibia,
on the west coast of Southern Africa, to Gaborone,
Botswana, and the economic hub of Gauteng,
South Africa. It then connects to the Port of Maputo,
Mozambique, on the east coast of Southern Africa. It
was jointly built and opened by the governments of
Botswana and Namibia in 1998 and is managed by the
Walvis Bay Corridor Group under a PPP.


The corridor’s success has been attributed to the
presence of political will and collaboration among
the participating governments and the private sector
parties of the managing PPP. It has achieved a degree
of harmonization among cross-border customs and
administrative procedures (the Single Administrative
Document 500), as well as legislation aimed at
facilitating transit traffic along the corridor. Operating
hours for border posts and axle-load limits have been
harmonized, while a common “through bond” has
replaced the previous requirement for multiple bonds.


Border clearance times have been reduced to 30–60
minutes, down from more than several hours, while
traffic has grown from just 10 trucks a day leaving the
Port of Walvis Bay in 2003 for other SADC countries to
more than 1,000 vehicles entering or leaving the port
every month. The corridor launched an e-customs and
e-trade pilot project in January 2011 to:


• Allow for electronic data interchange of customs
and other documents and information.


• Enable the electronic submission of supporting
documents to customs and relevant stakeholders,
and avoid the repetitive submission of the same
information to multiple parties.


• Reduce transaction costs on traded goods and
increase efficiency in the customs service.


• Create a single window and provide a platform
for automating the Trans-Kalahari Corridor
performance monitoring system.


Source: Walvis Bay Corridor Group (2011a,b); presentations by USAID and Microsoft at the USAID/WCO Southern African regional conference,
“21st Century Trade Facilitation Tools: Increasing International Competitiveness,” 10–11 September, Johannesburg; www.wbcg.com.na/
corridors.


Box 5.9


Senegal’s electronic cargo tracking system


Since 2008, COTECNA Inspection (a global company that
provides customs inspection and transit-monitoring
services for countries) has provided transit-monitoring
services to the government of Senegal, including
preshipment and destination inspection and installation
of scanners and transit-monitoring systems (known as
Cotrack) at various inspection points to regulate cargo
along the transport corridors connecting Senegal, Mali
and Mauritania, and at Dakar airport.


Cotrack allows Senegal authorities and private
businesses to better manage cargo in transit while
reducing corruption, smuggling and unlawful diversion
of goods in transit. Efficiencies introduced by the
system allow for faster processing of vehicles and
cargo, alleviating congestion at checkpoints. Cotrack


uses GPS devices that detect and transmit data on
a vehicle’s location, speed and direction and reports on
predefined events.


Customs officials can ensure compliance with transit
regulations and identify any irregularities during
transit, such as unduly long stoppages or route
deviations. The officials have installed 670 tracking
devices linked to six border posts along the Dakar–
Bamako (Senegal–Mali) and Dakar–Nouakchott
(Senegal–Mauritania) corridors. These devices have
improved information and the regulation of goods
in transit while reducing the incidence of fraudulent
declarations and transit delays. Customs officials now
focus their resources on shipments with irregular
incidents during transit.


Source: COTECNA (n.d.); AfDB and World Bank (2011).




57


critical means to provide a platform for cross-border
payments, cutting costs and time.


The first adjustment would be to introduce online
payment options for official government fees using an
NSW. Online payments ensure a record of transactions
is maintained for audits, while mobile-phone transfers
can be used for smaller amounts.38 Cross-border mobile
payments have already become a reality, though the
enabling legal framework still needs work. In South
Africa, for example, First National Bank’s Pay2Cell service
allows cross-border mobile payments for individuals to
Swaziland and Lesotho of up to ZAR1,500 a day.


For clearance, an online payment system typically permits
traders to submit electronic applications and pay customs
duty and other fees online.39 In Central Africa and UEMOA,
the regional single currency has allowed for advances
towards cross-border electronic payment systems using a
regional administrative order.40


In East Africa, the One Point Regional Duty Payment
Project enables banks linked to the port of entry to
transfer duties and taxes to the revenue authorities from
the country of customs declaration. This has reduced
fraud while streamlining customs procedures along
the northern corridor and allowing for revenue sharing
among authorities in the region.


The five central banks of Burundi, Kenya, Rwanda, Tanzania
and Uganda are piloting the East Africa Cross Border
Payment System (EAPS), one of the building blocks of a
regional monetary union. Regional banks have so far used
a time-consuming and costly process involving overseas
correspondent banks. The EAPS will use the real-time
gross settlement system of partner states to allow the
region’s commercial banks to settle intraregional cross-
border trade and financial transactions using the five
domestic currencies—though Burundi is yet to establish an
operational system along these lines.


The EAPS is expected to cut transaction costs sharply
(with an estimated 60 per cent of payments in East
Africa currently conducted in cash), as debits and credits
are made instantly. It is also expected to eliminate the
multiplicity of banking regimes and foreign exchange fees.
Consumers will be able to engage in electronic transactions
in the region from a single bank account without having to
open multiple accounts across the region.41


Although intraregional trade in COMESA grew impressively
over 2000–2011, from US$3.1 billion to US$18.8 billion,
traders continue to experience high transaction costs in
clearing goods. In 2012, COMESA launched its regional


electronic payment and settlement system to help increase
regional trade. The system is expected to cut transaction
costs from 5 per cent to 1 per cent and reduce transfer
times from 5 or 10 days to a same-day service. This is
already the case between Rwanda and Mauritius. Nine
central banks have signed up for the system and deposited
funds in their accounts held at the Bank of Mauritius,
which also serves as a clearinghouse. Savings from settling
payments under the new system are estimated at US$45.8
million, while intra-COMESA trade is expected to increase
as much as US$229 million.42


Opportunities and challenges


The opportunities for Africa arising from the ICT trends
described above are considerable, but there are also
substantial challenges. New ICT-based systems take time
to deploy and could require substantial investments
in hardware, software, training and maintenance. In
particular, new systems are unlikely to be effective if
they are not associated with reforms to simplify border
procedures and eliminate bureaucratic inefficiencies.


The value of ICT in trade facilitation derives, to a larger
extent than in most development sectors, from the
implementation of large-scale systems that are increasingly
networked and thereby leverage the efficiency and
coordination gains that can be achieved through system-
wide data sharing and data management. The engagement
of all stakeholders in the trade environment is required to
maximize these gains. Experience worldwide suggests,
for example, that complex applications are often best
implemented as PPPs that draw on expertise, address
needs and secure the support of government agencies
and trading businesses.


Businesses gain value from exploiting the potential of
ICT within their own systems—for example, by using
electronic transactions and by enhancing communications
with employees and business partners. They further
benefit from ensuring that their systems are compatible
with official applications for cargo tracking, customs
administration and e-commerce.


The adoption and gradual implementation of NSW
processes offer the greatest potential value for ICT-
enabled trade facilitation in Africa. The structural and
infrastructural deficits of African trade are currently
exacerbated by inefficiencies that result from poor data
sharing, inadequate coordination and low standards of
administrative practice, including corruption. By building
trade processes around a single platform that governs
progress of a consignment along the supply chain,
single windows reduce the number of interventions and




58


inspections required from government agencies, eliminate
many of the errors that appear in manual documentation,
allow resources to be targeted on suspect consignments,
enable more secure collection of fees and customs revenue,
and reduce the time required for transit.


While single windows have value at a national level, they
have even greater value at a regional level, where transport
costs are much higher and a single point of data entry and
data sharing can cover the entire transit route for goods
with regional destinations and transit between countries.


The development of regional single windows will require
heightened intergovernmental cooperation. Some
RECs, depending on their capacity, might be better
suited to move faster towards establishing the building
blocks for a regional single window. Progress towards
regional ICT-enabled trade is evident in COMESA, EAC,
ECOWAS and SADC. Where RECs do achieve progress
in trade facilitation, this can provide a model for ICT-
enabled integration in other economic and social sectors,
particularly where it builds on improvements in regional
communications infrastructure.


Conclusions and
recommendations
ICT cannot transform trade performance on its own.
The benefits described above depend on other factors,
such as the quality of data input into single-window
processes, the compliance of trading businesses and
the modernization of administrative systems. Further,
the value of ICT in trade facilitation can only be realized
if it is integrated with broader cross-cutting reforms by
governments and development partners. As Mauritius
demonstrates, such reforms must be ongoing and
sustained over a long time, so political will is critical. The
necessary supporting environment (figure 5.3) needs to


be in place if the potential benefits of ICT—particularly
from single windows—are to be realized. See box 5.10 for
a summary of conclusions and general recommendations.


On financing ICT


The upfront costs of introducing ICT solutions to
customs and trade facilitation could be high in the initial
phase, as dual systems need to be operated during
the transition from paper-based to paperless trade.
High costs are also incurred in retraining staff—in both
government agencies and user enterprises. Operations
and maintenance costs need to be considered alongside
the capital costs of deployment, and a total cost of
ownership approach should be adopted in making
financial projections.


The shortage of funding for trade automation projects
is often apparent when projects that were initially
financed by donor agencies need to be upgraded, as
with ASYCUDA to ASYCUDA++, and then to the latest
standard, ASYCUDA World.


The value of ICT in trade facilitation can be realized only
if it is integrated with broader cross-cutting activities by
governments and development partners. These include:


• Development of trade and industrial policies aimed at
economic diversification.


• Investment in power and transport infrastructure.


• Establishment of an enabling environment for
communications investments and an enabling legal
and regulatory environment for e-commerce.


• Greater attention to regional integration and
economic partnership by governments.


Figure 5.3


ICT and trade: The supporting environment


Formalities, governance
and ecient ow


of goods


Logistics, transactions
and infrastructure


support


Information on regulation,
taxation, non-tari barriers,
business opportunities and


compliance


Policy and regulation, standards, human capacity development,
business process change, governance and coordination


Source: Authors’ illustration.




59


Box 5.10


Summary conclusions and general recommendations


• Africa lags behind other world regions in
deploying ICT infrastructure, particularly
broadband. More investment is needed in regional
backbones, communications networks and related
energy infrastructure to enable all trade posts to
be integrated into single windows and to ensure
continuity of data transmission.


• Liberalization of communications markets and
the deployment of new international submarine
cables around the African coast have improved the
continent’s global connectivity and encouraged
investment in inland broadband infrastructure. The
advent of mobile transactions and low-cost mobile
roaming has affected transactions and cross-
border business interaction in some regions.


• Regional integration and single windows require
standardization of non-tariff regulations and
documentation along trade routes. This includes
adopting standardized digital formats for data
entry, interoperable systems for data interchange
(based on globally agreed standards) and reliable
processes for authenticating documents and
signatures. The quality of data input also needs to
be improved. Legislation enabling e-commerce
still needs to be enacted in some countries.


• There is a serious shortage of ICT skills in developing
and managing distributed data networks. Complex
systems like NSWs require specialist ICT skills, and
governments and businesses need to invest in
training in ICT capacity to secure the benefits of
ICT-enabled trade.


• Business, administrative and legislative systems
also need to be redesigned to take advantage of


ICT-enabled trade—transiting, for example, from
paper-based to paperless record keeping and
from full to intelligence-led inspection regimes.
Cohesive decision making, appropriate fee
structures and integration along the supply chain
are critical. The efficiency and coordination gains
achievable through ICT in customs administration
can only be unlocked if underlying bureaucratic
systems are simplified. The transition to a new
regime also requires a change in mindset
among officials.


• A high level of commitment is required, at the
national and regional levels, by governments
and trading businesses alike. Political leaders
must be prepared to address the sovereignty
challenges and partnership requirements of
regional integration. Users must have confidence
in the integrity and value of the systems being
introduced, especially regarding privacy and
data protection. Issues of corruption need to be
addressed. A high degree of cooperation between
government and business, including PPPs in the
management of systems, has proved beneficial,
as demonstrated in Ghana, Mauritius and
Mozambique.


• Major ICT systems (such as single windows)
involve substantial capital investments. While
the benefits of automation can be considerable,
some governments are reluctant to spend
resources on costly ICT solutions and associated
capacity building, particularly in regions where
government resources are limited or where
regional integration is not particularly advanced.
Development partners can thus play a critical
supportive role.


• Adoption of common standards for data interchange
and non-tariff requirements.


To governments


Governments are especially concerned with efficient
revenue collection, compliance and trade promotion
leading to economic growth. The starting point for
government engagement with ICT and trade should
be a national policy framework based on a critical
assessment of trade barriers and opportunities, through


which the most effective points of implementation for
ICT can be identified. Governments should also invest
in infrastructure improvements, without which ICT-
enabled trade facilitation will have limited impact.


Governments need to prioritize the following ICT-
enabled interventions, building sequentially from
points 1 to 7:


1. Adoption of international standards for non-
tariff barriers and for trade documentation, and




60


harmonization of both across land borders.


2. Adoption of single-window principles and
development of a strategy for gradual implementation
of them, based on a needs assessment and
stakeholder participation.


3. Upgrading of integrated customs management and
the development of collaborative government/
business-led port and cargo community systems
at ports and airports.


4. Introduction and development of intelligence-led
inspections with high levels of data integrity.


5. Integration of compatible border management systems
aimed at minimizing clearance time at border crossings.


6. Procurement and implementation of an NSW that is
consistent with automated customs management—
and that will integrate ICT-enabled applications at
particular locations and that may be jointly managed
through a PPP).


7. Experimentation with bilateral OSBPs with
neighbouring countries where harmonization
of non-tariff structures has been achieved.


In addition, from an early point in the sequence just
described, governments should address issues of
transaction and information access through:


• Enactment of legislation and implementation of
regulations and procedures that enable e-commerce
and electronic transactions.


• Implementation of portals that provide information
on national trade processes—including rules,
regulations and procedures—and on business
opportunities.


Implementation must be sequenced, in prioritized and
manageable stages that can be properly resourced,
with the consent and engagement of all stakeholders,
particularly trading businesses. Retraining and capacity
building will be critical, and progress should be
monitored and evaluated.


To RECs


RECs have an important role in enabling regional
integration using ICT and find themselves moving
at varying speeds in the implementation of trade
facilitation reforms such as the single window. For UMA,


the Community of Sahel-Saharan States, ECCAS and
IGAD, the priority should be to better coordinate the
regional integration and trade facilitation agenda. For
COMESA, EAC, ECOWAS and SADC emphasis should be
on maintaining existing momentum (including under
the COMESA–EAC–SADC Tripartite FTA) by:


• Implementing the regional vision for trade
facilitation, building on the single-window concept.


• Focusing on the infrastructure challenges that
inhibit trade, including inadequate transport and
communications networks.


• Supporting the harmonization of national
approaches to trade management across the region,
including common non-tariff requirements (such
as rules of origin and plant hygiene standards) and
common data and documentation standards.


• Implementing portals and other business
information resources.


• Monitoring and evaluating the development of
regional trade, including trade in services and
informal and formal trade in goods.


To development partners


International development partners can support
national and regional initiatives by:


• Investing in the enabling environment for trade,
including backbone infrastructure for power,
transport and communications.


• Providing financial support for national and regional
ICT-enabled trade facilitation programmes as
described above.


• Providing policy and capacity-building support in
diagnostics of customs and trade facilitation regimes,
as well as contributing to regionally harmonizing and
standardizing customs upgrades.


Navigating the road ahead


Evolving ICT trends have had a revolutionary impact
on trade in Africa, and this is expected to continue.
Nevertheless, ICT-based systems involve sizable
investments in infrastructure, hardware, software,
reforms and training. Implementation of large
networked systems takes time, especially when several
countries are involved.




61


Introducing ICT and integrated border management
solutions to customs and trade facilitation using an OSBP,
for example, can exceed US$20 million. This includes
costs for building physical facilities, equipment such as
weighbridges and scanners, software for single windows
and electronic customs submissions, and training
government and private sector officials. The experiences of
Ghana and Mozambique point to PPPs as a useful vehicle
for countries to meet the upfront capital, operations and
maintenance costs needed to deploy and manage trade
facilitation infrastructures. But countries should also
experiment with less costly solutions—taking advantage of
evolving technology.


Through innovation, infrastructure designs should
improve on previous trade facilitation solutions like the
Chirundu OSBP.


Moves towards ICT-enabled regional trade facilitation
mechanisms are evident in the COMESA, EAC, ECOWAS
and SADC regions, and these regions can learn from the
experience of the ASEAN single window. The COMESA–
EAC–SADC Tripartite FTA, an important building block
for the CFTA, can serve as a platform for harmonized
approaches to trade facilitation.


A focused approach is needed for trade facilitation
and ICT reforms, one that uses RECs as incubators and
building blocks for future continent-wide approaches.
This approach is in line with that in other regions and
is supported by experience through targeted donor
support from initiatives like USAID’s Competitiveness
and Trade Expansion programme in Eastern and Central
Africa. And as the Trans-Kalahari Corridor demonstrates,
rather than resulting in fragmentation, such focused
regional approaches allow for piloted innovations and
the pooling of resources, making it easier for policy
makers and development partners to set achievable
reform targets for member States. These approaches
allow for positive regional spill-overs—for example,
between transit and landlocked countries. They make
implementation, enforcement and sustainability more
manageable while still allowing for global convergence
on ICT and facilitation issues when it is guided by
multilateral agreements and standards.


Facilitation toolkits already exist to regionalize
multilateral standards and allow the benefits of
improved trade facilitation, such as transparency and
simplified rules and procedures, to be enjoyed beyond
the members of the REC.






63


1. All African countries have ratified the African
Economic Community except Morocco, which
withdrew from the Organization of African Unity.


2. The six sectors are energy, transport, tourism, ICT
and postal, meteorology and water.


3. Other beneficiaries of the corridor include
Tanzania, Malawi, Zimbabwe, DRC, South Africa
and Mozambique.


4. COMESA, EAC, SADC, ECOWAS and ECCAS.
5. This happens when companies establish a


processing plant in a member country with a
minimal level of value addition to take advantage
of the trade regime in the FTA.


6. Article XIV of WTO Agreement—WTO legal texts.
The Result of the Uruguay Round of Multilateral
Trade Negotiations.


7. Draft Report of the sixth meeting of the Council of
the Regional Customs Transit Guarantee.


8. Acquittal of customs bond means discharge from
debt or deliverance from a charge.


9. Article 3 of the ECOWAS Treaty. Article 5 of the
SADC Treaty. Articles 90–95 of the East African
Treaty.


10. Document A/P2/5/1982.
11. Act 5/96 UDEAC-611-CE-31.
12. The East African Community Vehicle Load Control


Bill, 2011.
13. Cameroon, Central African Republic, Chad, Congo,


DRC, Equatorial Guinea and Gabon.
14. Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau,


Mali, Niger, Senegal and Togo.
15. Lesotho, Namibia, South Africa and Swaziland.
16. For example, the ECOWAS Compendium of


Protocols, Conventions and Decisions Relating
to the Free Movement of Persons, the Common
Market for Eastern and Southern Africa Fifth
Meeting of Ministers of Infrastructure, and the
Meeting of SADC Ministers Responsible for
Transport and Meteorology.


17. Seamless Transport Committee.
18. Zimbabwe (part of the rail network from Beitbridge


to Bulawayo), Zambia, Malawi, Mozambique,
Tanzania, Kenya, Uganda, Gabon, Cameroon, Togo,
Senegal, DRC and Madagascar.


19. Official development assistance (Wikipedia.org).
20. The Joint Border Post functionality.
21. The East African Community One-stop Border Posts


Bill, 2012.
22. Space considerations preclude an exhaustive


examination of ICT in trade facilitation in all RECs. For
a more detailed assessment, see Yonazi et al. (2012)
and AfDB and World Bank (2011).


23. E-commerce generally involves buying, selling and
exchanging of goods and services over computer
networks (such as the internet) through electronic
transactions. In addition to the internet, e-commerce
transactions also take place through value-added
networks. By volume, business-to-business
e-commerce is ahead; however, business-to-
consumer (B2C) e-commerce is typically what comes
to mind when most people think of e-commerce.
B2C e-commerce sales in 2011 are estimated to have
grown by 20 per cent to US$961 billion according to
IMRG (2012).


24. For a comparative analysis, see Richa (2012).
25. See Hummels (2001). For a special focus on the trade


facilitation impact on air transport, see also Hummels
and Schaur (2012).


26. See Wilson (2003) and Bagai, Newfarmer, and Wilson
(2004). The WTO Agreements on Import Licensing
Procedures, Technical Barriers to Trade, and Sanitary
and Phytosanitary Measures are also relevant to trade
facilitation.


27. The Convention had 85 contracting parties as of
November 2012.


28. To view the complete list of UN/CEFACT recom-
mendations, see www.unece.org.unecedev.colo.iway.
ch.


29. See World Bank (2008).
30. See, for example, chapter 7 of the EU Council Decision


on the signature and provisional application of the
interim Agreement with a view to an Economic
Partnership Agreement between the European
Commission and its member States, on the one hand,
and the SADC Economic Partnership Agreement states,
on the other (14062/08). Brussels, 2 February 2009.


31. A monitoring study found that in the 12-month
period from March–July 2010 to March–July 2011,


Notes




64


travel costs for APEC Business Travel Card holders fell
38 per cent, for savings of US$3.7 million. Immigration
application times and processing fees fell 43.3 per
cent and 52.4 per cent, respectively, with 91 per
cent of card holders reporting satisfaction with the
scheme. See Hredzak and Zhang Yuhua (2011).


32. See Latin American and Caribbean Economic System
(2010).


33. This includes, for example, Central American Common
Market and the Central American Integration System,
MERCOSUR, the Andean Community, CARICOM
and various US trade agreements like the North
American Free Trade Agreement, CAFTA-DR and most
recently the CARIFORUM–EU Economic Partnership
Agreements. Although the Free Trade Area of
the Americas project did not reach conclusion, it
established an inventory of trade facilitation issues
that require technical assistance.


34. See www.doingbusiness.org.
35. See www.weforum.org/.
36. UNCTAD estimated at one point that the average


customs transaction involves up to 30 different
parties, 40 documents, 200 data elements (30 of
which are repeated several times) and the rekeying
of 60–70
per cent of all data at least once. See UNCTAD (2004).


37. See, for example, West Africa Trade Hub (2010).
38. For an example of mobile telephone transactions


in Kenya, see Jack and Suri (2010).
39. For a comparative example from India, see


Commissioner of Customs, Bangalore (2010).
40. Order No. 08/2002/CM/UEMOA. See Ahouantchede


(2011).
41. See AfDB (2012). See also Bosco Sebabi (2010).
42. See COMESA Secretariat (2012). See also Assessing


Regional Integration in Africa IV.




65


AfDB (African Development Bank). 2011. “The Middle
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Market Brief, April 20. Tunis.


———. 2012. “East African Community (EAC) Payment
and Settlement Systems Integration Project.” Project
Appraisal Report, October. Tunis.


AfDB (African Development Bank), OECD (Organisation
for Economic Co-operation and Development), UNDP
(United Nations Development Programme), and
ECA (Economic Commission for Africa). 2011. African
Economic Outlook 2011: Africa and Its Emerging Partners.
Paris: OECD Publishing.


———. 2012. African Economic Outlook 2012: Promoting
Youth Employment. Paris: OECD Publishing.


AfDB (African Development Bank) and World Bank.
2011. “Transformation-Ready: The Strategic Application of
Information and Communication Technologies in Africa.”
Regional Trade and Integration Sector Study. Washington, DC.


Ahouantchede, B. 2011. “Developing an E-payment
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Forum, Making Finance Work for Africa. Tunis.


Arvis, J-F., M. Alina Mustra, L. Ojala, B. Shepherd, and
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AT Kearney. 2011. “African Mobile Observatory: Driving
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———. 2012. E-Commerce Is the Next Frontier in
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———. 2012. “Decision on Boosting Intra-African
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AU (African Union) and ECA (Economic Commission
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Addis Ababa.


———. 2010. Assessing Regional Integration
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Addis Ababa.


———. 2012. Assessing Regional Integration in Africa V:
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———. 2007. “Rationalization of the Regional
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Australian Productivity Commission. 2004.
Rules of Origin under the Australia–New Zealand Closer
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71


AfDB African Development Bank
AMV Africa Mining Vision
APEC Asia-Pacific Economic Cooperation
ARIA Assessing Regional Integration in Africa
ASEAN Association of Southeast Asian Nations
ASYCUDA Automated System of Customs Data Management
AU African Union
AUC African Union Commission
CEMAC Central African Economic and Monetary Community
CEN-SAD Community of Sahel-Saharan States
CFTA Continental Free Trade Area
COMESA Common Market for Eastern and Southern Africa
DRC Democratic Republic of Congo
EAC East African Community
ECA Economic Commission for Africa
ECCAS Economic Community of Central African States
ECOWAS Economic Community of West African States
FDI Foreign direct investment
FTA Free trade area
GDP Gross domestic product
HS Harmonized Commodity Description and Coding System
ICT Information and communications technology
IGAD Intergovernmental Authority on Development
ISRT Inter-state Transit of Goods
JBC Joint border operations committee
KPA Kenya Ports Authority
KWATOS Kilindini Waterfront Automated Terminal Operating System
LLDC Landlocked developing country
MIP Minimum Integration Programme
NSW National single window
OSBP One-stop border post
PIDA Programme for Infrastructure Development in Africa
PPP Public–private partnership
PTA Preferential Trading Area
REC Regional economic community
RKC Revised Kyoto Convention
SACU Southern African Customs Union
SADC Southern African Development Community
TAH Trans-African Highway
TIPAC Inter-state Transit Regime
UEMOA Union Economique et Monétaire Ouest Africaine
UMA Arab Maghreb Union
UN/CEFACT UN Centre for Trade Facilitation and E-business
UNCTAD United Nations Conference on Trade and Development
UNECE United Nations Economic Commission for Europe
WCO World Customs Organization
WTO World Trade Organization


Acronyms






73


Acknowledgements


The sixth edition of Assessing Regional Integration in Africa, a joint publication of the
Economic Commission for Africa (ECA), the African Union Commission (AUC) and the African
Development Bank (AfDB), was made possible with the help of people and organizations
under the leadership of Carlos Lopes (Executive Secretary of the ECA), Nkosazana Dlamini
Zuma (Chairperson of the AUC) and Donald Kaberuka (President of the AfDB). Thanks
go to colleagues at the ECA Regional Integration and Trade Division, the AUC Trade and
Industry Department and the AfDB NEPAD, Regional Integration and Trade Department,
who participated in drafting and reviewing chapters. Special mention must go to Stephen
Karingi, Daniel Tanoe, Laura Paez, Emmanuel Chinyama, Dawit Tesfaye, Isidore Kahoui, Alex
Rugamba, Calvin Manduna, Enock Yonazi and George Mugabe. Thanks also to staff at the ECA
Subregional Offices, who provided valuable inputs. Consultants Ernest Mbhuli and Maximilien
Terreraho contributed material inputs.


Thanks as well to the following organizations, which participated in the report’s external peer
review: the East African Community, the Common Market for Eastern and Southern Africa, the
Arab Maghreb Union, the Economic Community of Central African States, Walvis Bay Corridor
Group, the Burkina Shippers Council, South Centre, the West Africa Trade Hub, TradeMark
Southern Africa, the Trade Law Centre for Southern Africa and ZimConsult.








United Nations Publication
Printed by UNECA, Addis Ababa, Ethiopia


November 2013


List Price: US$55.00
ISBN: 978-92-1-125121-0


In support of progress towards regional integration in Africa, the Economic Commission for Africa,


African Union Commission and African Development Bank jointly produce Assessing Regional


Integration in Africa (ARIA). The first edition (ARIA I), published in 2004, provided a comprehensive


assessment of the status of regional integration in Africa, with subsequent editions focusing on


thematic areas. Thus ARIA II examined the rationalization of regional economic communities and


their overlapping memberships. ARIA III addressed macroeconomic policy convergence, as well


as monetary and financial integration in the regional economic communities. ARIA IV focused


on enhancing intra-African trade. ARIA V provided analytical research and empirical evidence


to support the establishment of the Continental Free Trade Area and the benefits that African


countries stand to gain from it.


ARIA VI, “Harmonizing Policies to Transform the Trading Environment,” carries forward the


momentum of January 2012’s Decision and Declaration by addressing the issue of harmonizing


rules of origin and trade facilitation instruments to ease Continental Free Trade Area negotiations


by member States. The report starts with a brief overview of progress in regional integration,


followed by discussions on the harmonization of three key prerequisites to pave the way for a


meaningful continental market—rules of origin, trade facilitation instruments and cross-border


linkages for information and communications technology.




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