the latest non-tariff barrier? THE ELEPHANT IN THE …...April 2016 TRUMPED UP CHARGES the latest...

April 2016

TRUMPED UP CHARGES

the latest non-tariff barrier?

... truckers face new fines

VISA WOES ...

THE ELEPHANT IN THE ROOM ...bribery and corruption

CROSS-BORDERFREIGHT & TRADING WEEKLY

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www.ftwonline.co.zaCONTENTS

April 2016 Cross Border 1

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MITIGATING TRADE BARRIERS

INFRASTRUCTURE DRIVES GROWTH

NEW DIVISION LAUNCHED

TRANSPORTERS FACE NEW FINES

sa losing its lustre as gateway

LOGISTICS

4

transit time halved on dbn/ndola route7

logistics operator to launch express service9

business visas obstruct trade

GENERAL NEWS

10

JOCs facilitate cross-border trade14

wbcg to appoint full-time secretariat18

6 8

15

THE ELEPHANT IN THE ROOM...BRIBERY AND CORRUPTION

2

13

2 Cross Border March 2016

Ed Richardson

Economists have coined the phrase “thick borders” to summarise the list of challenges facing

companies wanting to do business within Africa – challenges that are largely left to clearing agents, forwarders and hauliers to manage.

“Empirical evidence suggests that only about a quarter of delays along major transport corridors are as a result of poor infrastructure, the rest being due to non-tariff barriers and poor trade facilitation,” according to a World Bank report, “De-fragmenting Africa”, edited by Paul Brenton and Gözde Isik.

The result is that it costs more than twice as much to move a container across a border in sub-Saharan Africa than between East Asian and OECD countries.

There are however signs that the authorities have taken note – at least in some regions.

The 2016 Doing Business report says sub-Saharan Africa accounted for about 30% of the regulatory reforms, making it easier to do business in 2014/15.

Members of the Organisation for the Harmonisation of Business Law in Africa (a West African initiative)

were “particularly active”: 14 of the 17 economies have implemented business regulation reforms in the

past year – 29 in total.

An International Monetary Fund report singles out Ethiopia, Kenya, Seychelles, South Africa and Tanzania as countries whose efforts

to breach the cross-border trade barriers are paying off.

“In these countries, the sectors

that have benefited the most from the deepening of integration include agriculture and agro-business (especially in Ethiopia and Seychelles), and manufacturing (particularly in Tanzania), but also textiles, transport and tourism, although to a lesser extent.

“These experiences bode well for the region: for one, the increase in depth of integration in some of these countries, at 10 percentage points or more, is of a similar magnitude to that experienced by countries such as Poland or Vietnam that are now

success stories within large GVCs (global value chains).

“The examples also highlight the sectors – agro-business, light manufacturing, tourism and textiles – in which sub-Saharan Africa has the potential to leverage its comparative advantages,” it adds.

But, the elephant in the room is bribery and corruption, both of which add significantly to the cost of cross-border trade in Africa.

According to research consolidated by the World Bank some 25% of companies doing business in Africa have reported incidents of bribery, compared to the global average of 17.4%.

Some 19% of firms say officials expect “gifts” before import licences are issued.

Around 37.9% of companies surveyed identified corruption as a major constraint to doing business

(16.9% in South Africa and 33.2% globally).

Steps are being taken to tackle the scourge by most countries with which South Africa does business (and

in South Africa itself). These include the introduction of

electronic document management at the border posts and increased surveillance.

However, the problem of having to bribe officials at random road blocks and other points remain.

www.ftwonline.co.za

Regulatory reforms address ‘thick borders’The elephant in the room is bribery and corruption

It costs more than twice as much to move a container across a border in sub-Saharan Africa than between East Asian and OECD countries.

“ 25%The percentage of companies trading

in Africa that have reported incidents of bribery.

Global export figures reflect the massive opportunity that the

Southern African Development Community (SADC) presents – and taking this for granted will be to our own detriment, says Duncan Bonnett of trade consultancy Africa House.

“We are very focused on the Brics countries and do not always pay enough attention to our neighbouring countries, taking them for granted.”

South Africa’s value added exports to Africa were in the region of R225 billion last year of which about 85% went into the SADC region.

“Of our value added exports globally 41% went into Africa – and the bulk of that was into southern Africa – while the total value-added exports to Brics countries amounted to only 9%,” said Bonnett. “As a country we need to look at our

focus. There is no denying our strong foothold in SADC but it is being eroded and I am not sure we are reacting quickly enough as SA Incorporated to the emergence of competitors in our stronghold.”

He said a response was definitely required from an SA Incorporated level. “We need an integrated approach to this challenge. The same applies to East Africa which is showing

incredible promise and offers some big opportunities to South African companies.”

Bonnett said it was increasingly evident that while companies involved in exports to the region were increasing sales annually – often by more than 15% in global terms – South African companies were not gaining market share, and more often than not losing it.– Liesl Venter

‘SADC before Brics’

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Cross-border countries are working hard to up their game and reduce dependencies on

South Africa, says Duncan Bonnett of consultancy Africa House.

“East Africa is fast changing and integrating and major inroads are being made globally as they start to attract attention. The focus has definitely moved away from South Africa – a move that we are also seeing more and more in southern African countries.”

Bonnett says as ports in countries such as

Mozambique, Tanzania, Angola and Namibia are upgraded and expanded along with road and

rail networks, more capacity is being generated within

SADC. “There is just less rationale to depend on South

Africa and as a country we need to be cognitive of this at all levels – be it government, institutions or industry,” he says. “We can no longer sit in South Africa and think that people from other

African countries are looking at us to supply

them and that they will continue to do this. The

further north one goes, traditionally, they have

SA losing its lustre as supplier, gateway

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had less to do with South Africa and these are markets that offer good opportunities.”

He says in a global environment the relevance of a strong manufacturing supplier in South Africa for cross-border countries diminishes every year.

“Also if we look at the gateway concept then it is quite generous to say South Africa is the gateway to southern Africa,” says Bonnett. “We certainly are not the gateway to Angola or Madagascar and only to parts of the Democratic Republic of the Congo. Nigeria is also fast becoming

a gateway into Africa and ditto for Kenya.”

He said the idea of carrying on the mantra of being the gateway was just not beneficial as it was resulting

in a complacent attitude on the part of South Africa that could have severe consequences.

“A lot of the work we are doing in Africa – and even within southern Africa – is suggesting that these countries are particularly

attractive markets and that there is no longer a hesitancy to bypass South Africa altogether. The idea that South Africa is still the gateway to cross-border countries is quite false.”

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SA losing its lustre as supplier, gateway

The idea that South Africa is still the gateway to cross-border countries is quite false.– Duncan Bonnett“

www.ftwonline.co.za

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Liesl Venter

Rising costs for operators are stunting intra-regional trade growth and hindering

cross-border movement of freight.

According to Gavin Kelly, spokesman for the Road Freight Association (RFA), while a lengthy and drawn-out court process has resulted in the Cross Border Road Transport Agency (CBRTA) being ordered to repay operators for overpaid permits, yet another issue has reared its head.

Kelly said there seemed to be a concerted effort to increase costs for cross-border operators.

“It is obvious that the CBRTA wishes to increase revenue but is still not seen to be adding

any value to the cross-border business,” he told FTW.

The CBRTA was in 2014 instructed to repay operators after it increased cross-border permit tariffs.

In a lengthy legal process the court found against the organisation and said it had to repay operators the difference between the original permit tariff and the increased tariff. The amounts totalled thousands of rands.

Whilst the CBRTA did not just accept the judgement and headed off to the constitutional court in its attempts to appeal, the operators were finally granted victory, forcing the CBRTA to reimburse them for the overpaid permits.

“We are not sure how many non RFA-affiliated operators

have taken advantage of the court order.”

But, he said, the agency had already come up with a new way to generate revenue.

“It is now imposing fines for expired permits that were not returned. This is not something it has ever done before.”

He said the RFA was investigating the matter and was hoping to take it up with authorities in the coming weeks.

“Tolls, taxes, permits and delays through border posts remain the big problem – all of which contribute to increased cost.”

He said on some routes hijacking was also an issue while cargo theft at border stops was increasing. This often occurred while trucks were parked waiting for scans, searches and clearances.

Transporters now face fines for expired permits

Collaboration on infrastructure development is key if southern

Africa is serious about growing cross-border trade.

According to Remmy Makumbe, director for infrastructure and services for the Southern African Development Community (SADC), collaboration between countries will be the difference between success or failure.

He said without a coordinated effort between countries rehabilitation of infrastructure such as railways would simply not work.

“It is not just about having infrastructure in each country,” he said, “but about the efficient movement of cargo through the countries on the infrastructure.

In other words there has to be collaboration so that there is seamless movement of freight.”

He said this went as far as giving customers a single through-fare

for cargo moved on a corridor regardless of the number of countries through which it was transiting.

“Through collaboration we make our transport systems across borders far more efficient

– which ultimately ensures that the region is more competitive globally.”

Makumbe said countries could not work in isolation and needed to collaborate, making sure they were on the same page.

He said through collaboration major successes were being

achieved across the region – particularly in the rail sector.

While South Africa, Zambia and Zimbabwe had all been investing in rail infrastructure, collaboration by all three railway operators had resulted in major gains on the North-South railway corridor for example, with cargo no longer being held up at each border post it crossed, he added.

“A strategic and integrated approach to infrastructure spend, maintenance and safety has also made an impact.”

He said freight was now moving from South Africa’s Durban harbour to Ndola and Kitwe in the Zambian copperbelt in less than seven days. This had more than halved the transit time compared to pre-collaboration days.

“This has resulted in broader rail discussions in the region as the success of this corridor is recognised. We can now also replicate what has happened on this corridor on other corridors in the region.”

He said this would ultimately boost cross-border trade while also increasing SADC’s global competitiveness.– Liesl Venter

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Collaboration halves transit time on Durban-Ndola route

There has to be collaboration so that there is seamless movement of freight.– Remmy Makumbe“

www.ftwonline.co.za


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February saw the launch by neutral operator CFR Freight of a new business division –

Freight Express – with specific focus on the African continent, said Paul Danvers, CFR Freight Express general manager.

“Africa has long been penned as the last real emerging market. Significant development is taking place in a number of countries and

CFR is well positioned to assist with providing a transport and delivery service for any kind of cargo to

any of South Africa’s neighbours,” he said.

According to Danvers there is increasing evidence of premium South African brands in most of the neighbouring countries. “This is an indication of positive and active development and interest from our neighbouring markets –

an opportunity we hope to take further advantage of,” Danvers commented.

He pointed out that trade in Africa could be “complicated” due to a number of factors, including differing regulations, but added that

CFR had both the expertise and infrastructure to cope with these challenges. “Key to our success is our understanding of the neighbouring markets as well as a solid delivery network, be it by road, air or sea,” said Danvers.

Freight operator launches new division

There is increasing evidence of premium South African brands in most of the neighbouring countries.– Paul Danvers

“

Cultural, country and language barriers continue to stymie

intra-Africa trade growth, despite a greater awareness by South African businesses of cultural sensitivities when doing business across their national borders.

That’s the view of Peter Draper, managing director of research company Tutwa Consulting, who said that in some cases it was not just language and culture that were barriers, but historical ties as well.

“South African businesses are generally not interested in the Francophone countries because the French are very entrenched in those regions already and it is quite hard to break in,” commented Draper.

He told FTW that SA did have stronger ties with some of the Portuguese-speaking countries – like Mozambique and Angola – due to their close proximity.

“But there are still some barriers due to language and culture. This can be overcome by SA businesses, including logistics operators, establishing key relationships in the countries in which they want to do business and so getting to understand the culture of doing business better,” said Draper.

Holding back growth


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Operations director of the 100% black-owned company, Gladys Ncube, told FTW that cross-border growth was currently being driven by the slump in South Africa’s exchange rate against the US dollar. “Most African countries trade in dollars and the rand’s low rate of exchange ups the demand for goods by our neighbouring countries. We hope to take advantage of that by offering a new express service to markets that need goods urgently,” she said.

The biggest cross-border

opportunities were currently offered by Zambia due to the reopening of mines and construction of the new Kazangula bridge, she added. “The contractors need machinery and mining equipment urgently and our new

express service can meet those demands.”

Congestion at borders and slow payment of customs duties in destination countries continued to challenge operators – largely the result of

restrictive government policies and regulations at every entry and departure point, she said.

The answer, in her view, is establishing partnerships on the ground with locals who can better navigate the complexities of their countries’ legislation. “We exported cargo from South

Africa to Angola some time ago and encountered major problems from the Angolan customs services operators who wanted to prevent our goods from being cleared because the quality inspection documents were not showing up on

their system. We called in the assistance of our logistics partner in Luanda and they were able to reduce our standing time from six weeks to only two,” said Ncube.

– Adele Mackenzie

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The reopening of mines and construction of the new Kazangula bridge in Zambia offer big opportunities.– Gladys Ncube

“

Logistics operator to launch express service


News that the Namibian authorities have decided to

enforce visa requirements for South Africans on business trips to the country is an example of how infrastructure investment to speed up the physical f low of goods is not being matched by upgrades in legislation.

The fact that there is some confusion over the need for the visas adds to the cost and hassles of doing cross-border business, and is just one example of how non-tariff barriers are hobbling efforts to grow intra-African trade across borders.

FTW’s sister publication eTNW first reported on the business visa clampdown in March this year.

It was confirmed by a travel agent, and is listed as a requirement by the AA, but the Namibian High Commissioner of South Africa’s website lists South Africa as one of the countries that is exempt from business visa requirements.

Namibia, it must be noted, is positioning itself as the SADC trade gateway to the rest of the world, and is investing billions of rand in port, rail and road infrastructure.

One of the key target markets for the port of Walvis Bay is Gauteng. Any regulations

making it more difficult for South African business people to pop over the border for a meeting or to see for themselves the impressive work being done on the port make it that much harder for Walvis Bay to sell itself.

South Africa has also been making it harder for the rest of Africa to do business with the country.

A tit-for-tat visa quarrel between the Kenyan and South African authorities in 2014 saw Kenya brief ly impose strict visa regulations.

While South Africans can once again obtain their business visas

at the Kenyan border entry point, their Kenyan counterparts still have to go through a lengthy process to obtain permission to come to South Africa on business.

Kenyan business people are not the only ones who receive an unfriendly welcome by the authorities – the Department of Home Affairs lists only Botswana, Namibia, Tanzania, Zambia, Zimbabwe, Malawi, Lesotho, Mauritius, Mozambique and Swaziland as African countries whose citizens do not require business visas for limited visits.– Ed Richardson

Liesl Venter

Working together countries can achieve far more when it comes

to transport infrastructure – ultimately boosting cross-border trade.

The unlocking of the Waterberg is a case in point.

Mining experts have maintained that to unlock the coal in the Waterberg it is imperative that the railway network be developed but also in Botswana.

Stakeholders in the process have said that extracting resources to best advantage requires investment in infrastructure not only by South Africa but also Botswana. A railway line linking Botswana to the port of Richards Bay has been part of the discussion.

According to Ravi Nair, acting chief executive of Transnet Freight Rail (TFR) – a major player in the Waterberg development which forms the basis of Strategic Integrated Project 1 (Sip1) – the current global economic and financial

meltdown has meant that Transnet has had to review its capital spend to align with current customer and market conditions.

As part of the National Development Plan, the Sips are aimed at fast tracking development in South Africa.

Sip 1 focuses on unlocking the northern mineral belt with the Waterberg and includes major investment in rail, creating a dynamic shift from road to rail in Mpumalanga. The development of a railway to Botswana, also home to large

coal deposits, enhances cross-border commodity movement significantly.

“Development of the Waterberg feeder rail system to accommodate demand for domestic and export coal as well as iron-ore, granite and other general freight originating from the Waterberg and Rustenburg area is progressing,” said Nair. “The Waterberg stage 2 construction to unlock a further 4mt from the current 2.6mt is expected to commence in April 2017 in alignment with mining developments in the area.”

www.ftwonline.co.za

Joint SA/Botswana effort critical to unlock Waterberg coal

Business visas get in the way of trade facilitation

Diesel prices in Angola remain well below SA prices, a benefit

for truckers passing through this oil-rich country on their overborder travels.

But, according to Eben Pieters, director of the Cape Town-based road transport and forwarding specialists, Orion Logistics, the comparative price differential isn’t what it used to be. “The price of diesel in Angola is around R5 a litre and in SA R9.45/l (taking it at the SA coastal wholesale price). In early 2014 it was a 225% difference but is now only about 47%.”

But, he added, it still allows SA truckers to fill their tanks on their way back to SA from or through Angola, and cover quite a bit of their return journey fuel spend.

And the restrictive rules on foreign truckers buying diesel in Angola are now quite clear and have remained stable for a year. This, according to Pieters, is a great relief to truckers because the first year they were imposed (2014) they changed day by day and from one fuel station to the next. “Now,” he said, “it’s quite clear. You are allowed to fill only the manufacturer’s specified number of tanks (two on most long-haul truck brands). But no extra fuel is allowed.”– Alan Peat

No change to Angola’s fuel rules

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www.ftwonline.co.za


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Liesl Venter

Industry has welcomed the development of a road to rail strategy through the North-South Corridor Investment

Project Initiative led by the NEPAD Business Foundation.

Sponsored by Transnet Freight Rail (TFR) and Grindrod, the project sees rail operators from South Africa, Zimbabwe, Zambia and the Democratic Republic of the Congo working together to develop the North-South Corridor.

With cargo now moving from Durban to Kitwe in Zambia in less than seven days as opposed to 30 days – which was the

norm two years ago – revival of rail in the region is on track.

According to Ravi Nair, acting chief executive TFR, the project takes into account the current and future volumes, the funding requirements as well as what infrastructure is required to

allow for an efficient rail operation.

“The North-South Corridor set up a Joint Operating Centre in Bulawayo which has been operational since January 2014. It houses railway operators from

TFR, National Railways of Zimbabwe (NRZ) and Beitbridge Bulawayo Railways (BBR), Zambia Railways Limited and La Societe Nationale Des Chemins de Fer Du Congo (SNCC)

from the DRC,” he said. “The operators focus on integrating the planning and execution of cargo train operations between South Africa, Zimbabwe, Zambia and DRC. Through this centre we are developing an integrated operational philosophy, one corridor investment plan, and a co-ordinated and agreed maintenance and safety standard. Skills development across the corridor is equally in focus.”

He said the outcome of this would ultimately allow for the standardisation of operating procedures, maintenance and safety standards for the railways between the four countries.

“We have already seen significant efficiency gains, the transit time for the train from South Africa to Zambia being one of them.”

Rail operators join forces to develop North-South corridor

Cargo is now moving from Durban to Kitwe in Zambia in less than seven days as opposed to 30 days.– Ravi Nair

“


Simba Logistics is looking to Zambia and Mozambique for

increased growth, says Simba Logistics MD, Ron Frick.

“Zambia has a predicted gross domestic product (GDP) growth rate of 4% per annum over the next two years on the back of a growing mining industry,” said Frick.

And opportunities out of Mozambique were driven by the planned infrastructural development surrounding the oil and gas fields in the northern part of the country, he added.

According to Frick there is also a financial incentive to source cargo from southern Africa as commodities and services are generally sold on an SA rand-based currency versus the US dollar or the euro-based currencies.

“The concept of ordering on a just-in-time (JIT) basis has also pushed cross-border trade growth, specifically for transport by road into neighbouring countries,” he pointed out, noting that generally cargo could be delivered within one week of loading from Johannesburg.

“Africa seeks African solutions and the needs for skills, product maintenance and after-sales service can easily be supported

from southern Africa – and our neighbours are increasingly recognising that.”

He said that the developing neighbouring countries were

creating demands for finished and semi-

finished products, on which South African producers should

focus.– Adele Mackenzie

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The concept of ordering on a just-in-time basis has also pushed cross-border trade growth.– Ron Frick“

Infrastructure development drives logistics growth

Governments in Africa are increasingly focused on

trade facilitation and are tackling several of the obstacles to cross-border trade growth, said managing director of Kingfisher Freight Services, Alwyn Nel.

“The electricity supply problems are being addressed, road infrastructure developments are bearing fruit and skills are being developed to ensure that borders and airports are manned by qualified staff,” he said. And while trading on the continent had its share of challenges, there was a sense that all stakeholders were working towards the common purpose of increased trade and reduced logistics costs, he added.

Nel told FTW that Kingfisher Freight had seen “marked increases” in traffic flows from all areas in Africa, pointing out that Kenya, Tanzania, the Democratic Republic of Congo (DRC), Zambia, Mozambique and Angola continued to offer the biggest growth opportunities.– Adele Mackenzie

High-level trade facilitation drives growth


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Liesl Venter

T ransnet Freight Rail (TFR) has seen a significant rise in cross-border volumes,

according to acting chief executive, Ravi Nair.

“There’s been an increase of 49% in traffic moving across our borders over the past five years – from 5.3mt in 2010/11 to 7.9mt in 2014/15.”

He said the focus on regional integration was a top priority and efforts were concentrated on three corridors.

“ We are focusing on the North-South; East West; and the Maputo Corridor,” said Nair. “The strategy aims to promote aligned planning and investment in the revitalisation of SARA railways infrastructure in support of growth and development of these corridors across the region. Transnet

is a key role-player in many such revitalisation programmes.”

He said from an operational point of view, the establishment of Joint Operations Committees (JOCs) was a strong focus.

The North-South Corridor JOC is situated in Bulawayo for example.

“These structures are set up with all players in the supply

chain – such as the various national rail operators, terminal operators, ports and the like – ensuring co-operation and coordination on the corridors.”

He said the success of

this approach had been most evident on the Maputo corridor where lessons learnt were being applied to other corridors.

Through a coordinated process, said Nair, cargo was being moved far more efficiently across borders via rail than had

been the case for many years in southern

Africa.

JOCs facilitate cross-border rail movement

Through a coordinated process cargo is being moved far more efficiently across borders.–Ravi Nair“


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As cross-border trade increases across the African continent,

Maersk Lines hopes to grow its own cross-border business by growing its through bill of lading options on both road and rail.

“We have seen higher growth volumes, through the respective gateway ports, to Mali, Chad, Burkino Faso, Niger, Zambia, Zimbabwe, Uganda and Rwanda,” said Bruce Marshall,

Maersk Line country manager: hinterland territories.

Marshall told FTW that Maersk Lines’ through

bill of lading was a good

example of how

some of the cross-border trade barriers, as well as risk and liabilities, could be mitigated. “With this product offering, as long as documents are received on time, Maersk Line can arrange cargo movement into

the southern Africa hinterland countries without the delay and subsequent penalty costs for the consignee/cargo owner to

receive their goods at the final destination,” he said.

According to Marshall, while Maersk’s focus has been on growing the through bill of lading within the southern African region through ports such as Dar es Salaam, Beira, Durban and Walvis Bay, it “continually seeks”

opportunities to add cargo receipt and delivery points on the continent.

“This allows us to offer increased f lexibility to our clients while also simplifying the supply chain and reducing unnecessary costs.” He said Maersk Line worked with various vendors – from ports

to terminals through to rail and road

operators – to cut down

on supply chain costs and drive efficiency.

Through bill helps mitigate trade barriers

The through bill of lading is a good example of how cross-border trade barriers can be mitigated.– Bruce Marshall“ NO DELAY

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The high rates of duty where regional trade

facilities\agreements do not reduce duty tariffs.

We have recently seen the introduction of new customs systems in Mozambique and Swaziland and the rollover has been nothing short of chaotic.~ Alwyn Nel, Kingfisher Freight

Wherever possible we have tried to work in

conjunction with the governing authorities and administrators to see what can be done to speed up the process.~ Alwyn Nel

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T here is still huge potential for growth in cross-border trade but a variety of trade barriers

remain – aside from the usual customs clearance and border congestion bugbears.

FTW asked some industry members to weigh in.

Import duties/forex shortages the biggest trade barriers?

effective March 1, 2016, Zimbabwe introduced the CBCA certificate (Consignment Based Conformity Assessment Programme). ~ Ron Frick, Simba Logistics

Roles and responsibilities need to be clearly defined for all parties involved. There should be no room for assumptions – as trivial as it may seem. All services and related costs need to be accounted for upfront.

When selecting service providers, shippers should take into consideration the cost of doing business, but this should not be the only criterion used in the nomination of a service provider. Value should be placed on the expert knowledge of a service provider who can provide for safe and reliable transport and effectively and expeditiously deal with problems as and when they arise.

Increased relationship marketing in Africa will go a long way to improving knowledge of the markets, the cultures and the procedures that need to be followed as a means of doing effective business. ~ Ron Frick

What are the biggest trade

barriers holding back cross-border growth?

How can these barriers be

overcome?

The availability of foreign exchange to traders

enabling them to transfer funds within reasonable time frames in order to procure goods quickly. The South African trader needs to develop more confidence in trading with the rest of Africa with regard to documentation requirements, protocols and the formalities of securing payment for goods and services.

The introduction of certificates required for trading into some African countries is new and has created some level of uncertainty amongst traders with regard to procedural requirements. For example,

There is a need to ensure contracts are worded appropriately.

The lack of cross border visas for commercial drivers.

High transit fees in some of the countries. ~ Cindy-Lu Hasheela Walvis Bay Corridor Group

We have established transport forums between the various

countries. These transport forums have been set up through memorandums

of understanding (MoU) with the various countries and through private public partnerships (PPPs) where we discuss and try to resolve the various corridor matters. ~ Cindy-Lu Hasheela

Q1

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T he member states of the Walvis Bay-Ndola-Lubumbashi Development Corridor

– Namibia, Zambia and the Democratic Republic of Congo (DRC) – are in the process of establishing a full-time secretariat to ensure the smoother f low of goods between the three countries.

Cindy-Lu Hasheela, manager of marketing and communications at the Walvis Bay Corridor Group (WBCG), told FTW that the secretariat should be operational in July 2017.

WBCG is also establishing working groups at all corridor borders to resolve issues between transporters and government

agencies. “We have already managed to resolve a number of trade barriers and other issues through meetings with the member states of the respective corridors,” said Hasheela.

According to her, the growing copper trade along the route offers a number of growth opportunities for logistics service providers, highlighting the need for the cost-effective and efficient movement of goods across the respective borders.

Hasheela pointed out that WBCG had embarked on a “very aggressive marketing and business development campaign” to grow volumes along the respective corridors, specifically targeting the Southern African Development Community (SADC) market.

“We are focusing on building

the corridors out of Walvis Bay port as an alternative trade route for SADC,” she commented.

As part of the campaign, WBCG has been focusing on

improving road transport legislation and immigration policies for commercial drivers as well as establishing stronger road infrastructure, Hasheela said.

Walvis corridor to appoint full-time secretariat

The Walvis Bay to Ndola, Zambia and Lubumbashi Development Corridor is a main copper trading route within the SADC region.


A frica is a continent of extremes – including cross-

border trade.One of the most extreme cases

of a dysfunctional border must be Kinshasa-Brazzaville, which is currently the third largest urban agglomeration in Africa.

The Congo river is all that divides the two adjacent cities and the Democratic Republic of Congo and Congo from the Republic of Congo.

It costs on average US$40 for a return trip – or between 40 and 80% of the average monthly income of residents.

“As a result passenger traffic at this obvious focal point for

cross-border exchanges between the two Congos is around five times smaller than that between East and West Berlin in 1988 – which was of course well before the dismantling of the

Berlin Wall!” says Anabel Gonzalez, senior director of the World Bank Group Global Practice on Trade and Competitiveness.

Brulhart and Hoppe in their report on “Economic

Integration in the Lower Congo Region: Opening the Kinshasa-Brazzaville Bottleneck” found that only 1.12% of all imports recorded by the Republic of Congo (RC) came from the Democratic Republic of Congo (DRC).

According to the World Bank’s “Linking African Markets: Removing Barriers to Intra-Africa Trade” report the high cost of crossing the river is due to monopolies in the ferry services owned by the respective governments.

“Cumbersome customs procedures are also costly and cause long delays for both passengers and the transportation of goods.

“For example, only four agencies are mandated to be present at the Kinshasa border crossing, yet up to 17 agencies operate there, raising fees from traders and travellers without offering any corresponding services,” it adds.

“We all know of other examples and evidence of the high costs of intra-African trade,” says Gonzalez.

“We estimate that intra-African trade costs are around

50% higher than in East Asia, and are the highest intra-regional costs in any developing region.

“The result of these high costs is that Africa has integrated with the rest of the world faster than with itself,” she says in a statement.– Ed Richardson

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Exorbitant intra-Africa trade costs scupper growth

The result of these high costs is that Africa has integrated with the rest of the world faster than with itself.“

Fact Sheet

Intra-Africatrade costs

• 50% higher than South East Asia

• The highest intra-regional costs in any developing region

www.ftwonline.co.za

20 Cross Border April 2016FTW2828SD

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Kris Freight Logistic .............................4Lalgy .....................................................8Maersk South Africa ...........................3MSC Logistics ................................... IBCMSC Shipping ................................... IBCNamgola Logistics ...............................4Port of Maputo ..................................17Prestmarine International ................19Professional Aviation Services .................................................5R & G Logistics ...................................14Rara Avis Freight and Logistics ........18

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Adele Mackenzie

Intra-African trade, as a percentage of total trade on the continent, has increased from the 12% average recorded

in 2013 to 17% currently. South Africa’s exports to the continent have risen steadily to around

R70 billion per annum (recorded in 2015) while its imports from Africa are about half that, recorded at R35 billion in 2015.

The Gauteng Growth and Development Agency (GGDA) released its report on trade and foreign direct investment inflows from South Africa to Africa

last month, pointing out that although South Africa lacked the “financial might” that the continent’s biggest traders and investors – the European Union, the United States, India and China – possessed, it did have other advantages, such as a cultural and historical affiliation as well as a

geographical proximity.The GGDA report points out

that South Africa’s lower import volumes from Africa are due to the fact that there are weak levels of manufacturing on the continent and that when there is production, many countries produce similar types of goods.

Intra-Africa trade on the up

SA’s Top import regions

SA’s Top export regions

FDI into Africa - Top 5 sectors

SA’s Top SADC Imports

1 1

3 34 4

2 2

SADC SADCWest Africa West Africa

North Africa North AfricaEast Africa East Africa

Mineral products account for over two thirds of SA’s imports from the Southern African Development Community (SADC) region.

Machinery exports are by far the biggest exports out of SA to the rest of Africa.

13%5,2%

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