Trade corridors driving growth
Intra-African trade cannot be stimulated and developed without a continent-wide action plan.
The interim chairperson of the African Corridor Management Alliance (ACMA) Johny Smith has hailed the action plan on boosting intra-Africa trade and the framework for establishing a Continental Free Trade Area (CFTA) as the driving force for the enhanced role of Corridor Management Initiatives (CMIs) on the continent.
“Corridors must not be viewed as conduits to growth and regional integration only, but also as engines of regional and local development. The establishment of ACMA will contribute towards this goal by increasing gains from expanding development opportunities arising from the network of inter-linked corridor routes,” Smith told delegates at the opening of the inaugural meeting of the organisation in Walvis Bay on Monday.
According to Smith, transport corridor operations on the continent, are largely characterised by long transit times and high costs, making doing business in Africa very expensive with a negative impact on the ability of firms to compete globally.
Therefore, Smith said, the development and modernisation of transport infrastructure and removal of non-tariff barriers along corridors of Africa is critical for trade expansion and regional integration and the role of CMIs in addressing these challenges is paramount.
“The implementation of the ACMA strategy will enhance the capacity of economic corridors to strengthen investment for local production capacity and value addition. Effective management of development corridors will improve the capability to promote investment in areas such as agro- industries and -manufacturing, natural resource-based enterprises, large- and small-scale industries, trade (including planned roadside shops), tourism (rest houses and hotels), and schooling and health facilities located in the immediate vicinity of the corridor.”
CMIs play a considerable role in the trade agenda of the region and trade facilitation and Smith stressed that this role could be further enhanced when they operate as a unified body proposed under the Pan African Network of Corridor Management Institutions (PANCMI) initiative.
Existing transport corridors are being transformed into economic corridors with the aim of making these the driving force for transformation through value chain and enhanced linkage built on rich regional resource endowment within the framework of the continental development architecture by the Africa Union.
“The ultimate goal of corridors is to promote both internal and external trade by providing more efficient transport and logistics services through the implementation of strategies and interventions that reduce transit times and the cost of shipping goods along corridors. It also serves to improve the quality of services and infrastructure along corridors. Support of development corridors aims to stimulate intra-regional and global trade and aims to foster market integration. This will be realised by providing more efficient transport and logistics services through the implementation of strategies and interventions that reduce transit times and costs of shipping goods along the corridor and by improving the quality of services along the corridor,” said Smith.
The strategy document to support the architecture of ACMA dictates economic transformation and the need to be anchored on domestic resource mobilisation through effective text policies, saving mobilisation and the use of other financing mechanisms such as pension funds, sovereign wealth funds, diaspora bonds and remittances as well as the participation of the private sector.
ACMA will soon setup a consultative public-private partnership (PPP) mechanism capable of coordinating, integrating and optimising various corridor improvement initiatives by stakeholders.
The PPP framework for AMCA allows for the public sector to provide advice and action regarding issues such as customs, transport regulation and infrastructure development while the private sector will focus on implementing various projects and business opportunities to spearhead trade and economic development along various corridors. The private sector is expected to provide capital investment on the basis of a contract with the public sector providing agreed services and the cost of providing the service to beneficiaries.
The actual amount needed to realise the implementation of ACMA initiatives and activities during the strategy period is estimated to be US$4.405 million (N$57.77 million).
The realisation of the long-term goals of the alliance requires a funding strategy that ensures stable sources of funding to achieve expected outcomes from corridor development initiatives. Some funding options that could be considered include engaging African philanthropists on projects of their interest and emphasising the role of domestic financing.
The continent already spends US$45 billion (N$591 billion) a year on infrastructure of which two thirds is domestically financed from taxes and user charges. To build the infrastructure to support growth and meet development goals, Africa will have to spend about US$93 billion (N$1.2 trillion) a year for a decade, according to the African Development Bank. Two thirds of this sum would be for investments and hence the significance of PPPs.
OTIS FINCK
“Corridors must not be viewed as conduits to growth and regional integration only, but also as engines of regional and local development. The establishment of ACMA will contribute towards this goal by increasing gains from expanding development opportunities arising from the network of inter-linked corridor routes,” Smith told delegates at the opening of the inaugural meeting of the organisation in Walvis Bay on Monday.
According to Smith, transport corridor operations on the continent, are largely characterised by long transit times and high costs, making doing business in Africa very expensive with a negative impact on the ability of firms to compete globally.
Therefore, Smith said, the development and modernisation of transport infrastructure and removal of non-tariff barriers along corridors of Africa is critical for trade expansion and regional integration and the role of CMIs in addressing these challenges is paramount.
“The implementation of the ACMA strategy will enhance the capacity of economic corridors to strengthen investment for local production capacity and value addition. Effective management of development corridors will improve the capability to promote investment in areas such as agro- industries and -manufacturing, natural resource-based enterprises, large- and small-scale industries, trade (including planned roadside shops), tourism (rest houses and hotels), and schooling and health facilities located in the immediate vicinity of the corridor.”
CMIs play a considerable role in the trade agenda of the region and trade facilitation and Smith stressed that this role could be further enhanced when they operate as a unified body proposed under the Pan African Network of Corridor Management Institutions (PANCMI) initiative.
Existing transport corridors are being transformed into economic corridors with the aim of making these the driving force for transformation through value chain and enhanced linkage built on rich regional resource endowment within the framework of the continental development architecture by the Africa Union.
“The ultimate goal of corridors is to promote both internal and external trade by providing more efficient transport and logistics services through the implementation of strategies and interventions that reduce transit times and the cost of shipping goods along corridors. It also serves to improve the quality of services and infrastructure along corridors. Support of development corridors aims to stimulate intra-regional and global trade and aims to foster market integration. This will be realised by providing more efficient transport and logistics services through the implementation of strategies and interventions that reduce transit times and costs of shipping goods along the corridor and by improving the quality of services along the corridor,” said Smith.
The strategy document to support the architecture of ACMA dictates economic transformation and the need to be anchored on domestic resource mobilisation through effective text policies, saving mobilisation and the use of other financing mechanisms such as pension funds, sovereign wealth funds, diaspora bonds and remittances as well as the participation of the private sector.
ACMA will soon setup a consultative public-private partnership (PPP) mechanism capable of coordinating, integrating and optimising various corridor improvement initiatives by stakeholders.
The PPP framework for AMCA allows for the public sector to provide advice and action regarding issues such as customs, transport regulation and infrastructure development while the private sector will focus on implementing various projects and business opportunities to spearhead trade and economic development along various corridors. The private sector is expected to provide capital investment on the basis of a contract with the public sector providing agreed services and the cost of providing the service to beneficiaries.
The actual amount needed to realise the implementation of ACMA initiatives and activities during the strategy period is estimated to be US$4.405 million (N$57.77 million).
The realisation of the long-term goals of the alliance requires a funding strategy that ensures stable sources of funding to achieve expected outcomes from corridor development initiatives. Some funding options that could be considered include engaging African philanthropists on projects of their interest and emphasising the role of domestic financing.
The continent already spends US$45 billion (N$591 billion) a year on infrastructure of which two thirds is domestically financed from taxes and user charges. To build the infrastructure to support growth and meet development goals, Africa will have to spend about US$93 billion (N$1.2 trillion) a year for a decade, according to the African Development Bank. Two thirds of this sum would be for investments and hence the significance of PPPs.
OTIS FINCK
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