By Sola Afolabi and Niels Rasmussen, USAID West Africa Trade Hub
You’d have to be a particularly devoted hermit to not know that business in Africa is rapidly expanding. The world’s fastest growing economy in the world is in Africa – and may be for some time given the confluence of many trends.
The opportunities to do business are enormous only matched by the impact they would bring on poverty. But here’s what’s truly and frustratingly remarkable: They could be significantly greater. Consider one salient fact: up to 40 percent of agricultural goods in West Africa are lost to spoilage between the farm and the markets in the region.
That loss is representative of the many missed opportunities in Africa today. In addition, across Africa, trade barriers cost the continent billions in lost trade opportunities every year, the World Bank reported last month in a must-read study for anyone concerned with business on the continent.
The studies we’ve conducted at the USAID West Africa Trade Hub point to the specific barriers responsible and detail their serious impact on trade. Working closely with stakeholders across West Africa, we’ve also helped implement various solutions that are bearing fruit.
The good news is that solutions are readily available – there are lots of obvious places to eliminate trade barriers and reduce delays and costs that are like sand in West Africa’s economic engine. Implementing the solutions is the critical piece of the puzzle.
The key is private-public sector collaboration and there is good news on that front: in May, the first Borderless conference, “Transforming Trade,” will take place in Abidjan, Cote d’Ivoire. It’s the first event of its kind in West Africa: Political leaders will sit down with business leaders to move from talking about the issues to actually taking the decisions necessary to change the situation. Registration for the event is online here.
Borderless began as an advocacy campaign in 2010 when stakeholders launched it at the Benin-Nigeria border. The campaign involved private sector companies, civil society, public sector officials, transporters, truck drivers and media, among others.
And it has worked: in Senegal, bribery at checkpoints along the route from Dakar to Bamako has been cut in half; in August 2011, Togo’s Minister of Security and Civil Defense eliminated all of the police and gendarme checkpoints along the national highway; and, in Cote d’Ivoire, good road governance has seen the number of checkpoints plummet from 40 to 16 since the political crisis was resolved last year.
Real change is coming – but more is needed. The stakes, indeed, are very high. The question is no longer whether West Africa can develop and grow economically – it’s how that growth and development should occur, with particular attention to: Who will benefit?
Faced with high income inequality, it’s essential that West African companies grow to meet the increased consumer demand across the region. But the trade barriers in West Africa are punishing them daily. In effect, because of these barriers, it’s easier and more competitive to import goods from virtually anywhere in the world except West Africa for West Africa’s emerging middle class to consume.
The barriers are particularly troubling for food security. If even half the 40 percent loss in agricultural goods estimated by one study really occurs, no wonder so many people cannot afford food in West Africa – and no wonder the region relies so much on imported food goods.
Those concerned with state revenue should keep in mind that removing the barriers will mean more business – and more business means more revenue to the state. More importantly, removing trade barriers will make West Africa ever more attractive to investment – companies will expand operations to serve the larger West African market. That means one thing for sure: More jobs for West Africans.
The Borderless Conference has already attracted major international traders from around the world and in the region because more and more people are recognizing that West Africa must move beyond the talk and get to action on dismantling trade barriers.
Sola Afolabi is the Business Environment Director at the USAID West Africa Trade Hub and Niels Rasmussen is the Transport Director at the USAID West Africa Trade Hub.