Author: ICE Tech
The significance of trade corridors in Africa is immense. The establishment and maintenance of these corridors stimulate economic growth, open up investment opportunities, create jobs, and ultimately lead to an increase in GDP. When governments prioritize the development of trade corridors through infrastructure investment, policy formulation, and private sector promotion, value is created at every economic level. Improving the efficiency of corridor movement will enable Africa to fully harness the benefits of international trade and become a more significant player in the global economy.
The Role of Trade Corridors
Trade corridors are more than just roads; they are a vital set of services for economic growth and development. These corridors consist of routes that facilitate the movement of goods and the provision of services through countries in the region. They provide safe and economically viable transport bidirectionally, facilitating an exchange of goods and services.
The African Continental Free Trade Area (AfCFTA)
The African Continental Free Trade Area (AfCFTA) aims to create a single market for goods and services in Africa, which will significantly increase intra-African trade and promote economic growth. Africa must prioritize the transformation of key trade corridors which connect the Regional Economic Communities (REC) if the continent is to reap the full potential of the AfCFTA and improve its economic performance.
Attracting investment relies on an environment that can allay fears of diminished returns or opportunities turning into high-risk investments. An established trade corridor, even a corridor in the process of being created, promotes investment opportunities, as investors are more likely to invest in regions with good trade links or ones that show promise of becoming such. The continued investment in the construction and maintenance of trade corridors can also foster local job creation, keeping the momentum going and leading to an increase in income levels and economic growth.
Challenges and Solutions
The creation and maintenance of trade corridors in Africa is currently under threat of either slowing down or not yielding significant growth. Poor infrastructure, inadequate financing, and inadequate policies are hindering their development. Resolving these issues requires the following actions from the African governments responsible for these trade routes:
- Invest in infrastructure
- Formulate favourable policies
- Promote private sector investment
Notable African Corridor Initiatives
ISCOS (Inter-State Committee for Drought Control in the Sahel) was established as an intergovernmental organization in 1973 to address the recurrent drought and food crises in the Sahel region of West Africa. While ISCOS’s primary focus is on drought control, it is also playing an increasingly key role in promoting regional cooperation and development, including trade. ISCOS has facilitated the establishment of trade corridors in the Sahel region by promoting the development of infrastructure and policies that facilitate cross-border trade. For example, ISCOS has supported the establishment of the Trans-Sahara Highway, which is a major trade route linking West African countries to North African and European markets. ISCOS has also facilitated the establishment of regional trade agreements, such as the Economic Community of West African States (ECOWAS) Trade Liberalization Scheme, which aims to promote free trade and investment in the region. Realising the value, ISCOS has supported the development of regional value chains, which are critical to the enhancement of the competitiveness of African products in global markets. For instance, ISCOS has supported the establishment of livestock markets in the Sahel region, which have facilitated the movement of livestock and other animal products across borders.
The Beitbridge Modernisation Project
The Beitbridge modernisation project is a model for what is possible with private sector partnership. The “new” border has been fully operational since November 2022 with a resultant dramatic improvement in throughput, with freight goods passing through the Zimbabwe border post in an average of 3 hours from an average of almost 72 hours before the initiative. Furthermore, governments revenue has been reported to have increased by almost 50%.
The early benefits to the private sector from the reduced processing time and dramatic reduction in corruption is improved profitability for users of the border post moving goods to clients. In the long-term, the reduced standing time and increased throughput broadens the potential for a greater variety of goods that can be exported, including time sensitive perishables. This illustrates how investing in one aspect of the trade corridor, facilitates growth and seeds opportunity.
The ICE Borders platform has facilitated this improvement by automating the flow of vehicles through the border post, creating transparency between government departments that drives operational efficiency, confidence, and ultimately growth.
Revolutionizing trade corridors in Africa is a key step towards unlocking the continent’s potential. With the right investment and policy support, these corridors can become a driving force for economic growth and development.