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Setting-up Smart Corridors will help get trade moving on the continent

New Recognition of the Relevance of Multi-Stakeholder Cooperation for Improved African Trade

The need to improve African trade continues to be of the greatest importance with the slow materialisation of the African Continental Free Trade Area (AfCFTA) being one of the greatest encouraging factors. South African exports to AfCFTA countries already account for nearly a quarter of the country’s global exports and this is theoretically expected to rise rapidly as the agreement kicks in. 

It nevertheless remains a reality that there are many major challenges for  African trade with these including such issues as those  relating to the turbulent geo-political context, regulatory frameworks, the fragmented African market, energy, water and finance. The need to strengthen multi-modal transportation infrastructure with its key role regarding the the creation and functioning of production value chains remains particular relevant as is the need for multi-stakeholder cooperation.

The Program for Infrastructure Development in Africa (PIDA) is one of the flagship programmes of the African Union (AU) that aims to address Africa’s infrastructural challenges, especially those of transportation, thereby supporting the goals of the AfCFTA to create an integrated continental market along with the related goals of integrated regional economies. Despite progress on many fronts existing physical and digital transport infrastructure in most of Africa generally remains inadequate to achieve these goals. 

Related to the problems of infrastructure are those of logistics with especially damaging effects of NTB costs impacting value chain development and trade.  The fact that much of Africa’s trade is linked to inland areas makes an expanded roll-out of dry ports in Africa all the more imperative along with innovative ways in which challenges can be addressed vis-à-vis two main categories of transportation infrastructure ie those relating to relevant physical as well as digital infrastructure.

Transportation challenges include inefficient ports, uncoordinated border posts, a lack of shared data relevant to the trade flows, the absence of real time monitoring of goods from origin to destination, a generally slow physical movement of goods, an absence of supportive ICT systems in many cases, weak often out-dated rail systems, poor condition of roads which are being forced to carry increasing amounts of freight with multi-facetted negative results, weak coordination between many key government officials such as those dealing with Customs and Transport, frequent obstructive bureaucracy with much red tape, and not infrequent cases of corruption.

The increased use of digital solutions can be a major help to improve many of these problems and improve trade flows including coordination between role players and standardization.

Challenges have also led to increased usage to e-commerce in Africa which has helped stimulate growth in de-centralised manufacturing and production. There has also been growth in the use of Blockchain Technologies. Opportunities for digitally- managed trade flows to add to efficacy and cost savings in South African trade flows are considerable while adding to the complexity of factors involved in multi-modal transport. 

An important new procedure is the utilization of expanded versions of digital governance systems on transportation nodes and corridors to improve support of trade flows, ie Smart Corridors. This needs greater attention and the AU as well as some Regional Economic Communities (RECs) have are already begun or plan such corridors to improve trade flows. Smart Corridors require a national and/or cross-border hub/platform that helps connect the trading community in a broad eco-system of stakeholders, thereby improving regional integration.

This multi-factor approach has special importance for developing the increasingly important bio-economy with its tremendous potential gains. The forestry sector is one of the best examples of having considerable benefits for South Africa, its economy, and employment creation along with tangential gains which include environmental, R&D capabilities, and rural development. The format of the forestry sector, although linked to physical infrastructure, would also make its entire chain of activities especially well- suited for digital infrastructural support and Smart Corridors with Blockchain features.

In this fluid context South Africa has unfortunately experienced increased challenges regarding its trade-supportive infrastructure and especially that relating to transportation. 

President Ramaphosa recently noted that for some years “the efficiency and competitiveness of our ports and rail network have been in decline”, and South Africa needs to “fix” its logistics architecture. Railways have become particularly problematic as have some of the key ports used for exports. The mineral sector has been among those most impacted as is illustrated by the fact that coal exports using Richards Bay have recently dwindled to levels last seen in the early 1990s. In recent months fruit exporters have also complained of severe problems.

Unfortunately it is not only regarding infrastructure where South Africa has been falling behind on key issues related to trade. Despite the relative sophistication of the South African economy there has been a decreasing availability of many of the supportive clusters of inputs and entities which feed into the value chains that utilize the infrastructural support for diversified value-add combinations and onwards processes. 

The need for expanded institutionalized cooperation between all stakeholders, especially business and government, is increasingly necessary and is increasingly happening. It is in this context that President Ramaphosa has announced that, as is happening in the energy sector, the private sector can now become involved in South Africa’s freight rail operations while South Africa maintains state ownership of the routes. Also that by” upgrading and expanding our port terminals through innovative public-private partnerships, we aim to position South Africa as a leading player in global markets”.

These and similar moves have significant relevance for trade and should have echoes in other aspects of the context in which South Africa’s trade takes place.

The writer, Dr John Maré is a former South African diplomat and Deputy Ambassador to the European Union and advises on international trade, public affairs and diplomacy.  This article first appeared in the Business Day newspaper.

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