Why is the transit of goods so expensive in Central Africa?

07 June 2022

Written by: Alexandre Larouche-Maltais, Article No. 88 [UNCTAD Transport and Trade Facilitation Newsletter N°94 - Second Quarter 2022]

News

© Jan Hoffmann | Transit-transport in Chad

 

From 21 April to 18 May 2021, the United Nations Conference on Trade and Development (UNCTAD), in collaboration with the Economic Community of Central African States (ECCAS) and with the financial support of the African Development Bank (AfDB), organised a series of interactive webinars dedicated to the international transit of goods in francophone countries of Central Africa.

Fourteen national representatives from the public and private sectors of seven countries in the ECCAS zone contributed to the exchanges with invited experts from UNCTAD, ECCAS and the AfDB, the World Customs Organization (WCO) and the United Nations Economic Commission for Europe (UNECE).

This text reflects the work undertaken to identify the challenges of transit facilitation in Central Africa.

 

 

The costs and delays associated to the international transit of goods have a significant impact on Central African countries’ competitiveness. World Bank studies estimate that each additional day in transit costs, on average, 0.8% of the total value of the goods transported, and that the landlockedness of a country increases freight costs by around 50%. Thus, the longer the transit time, the higher the inventory costs. For some landlocked countries in Central Africa, transport costs represent 35% of the value of exports, and more than 45% of the value of imports.

For road transit, variable costs related to fuel, tyre wear, truck maintenance and informal payments can be more than twice higher on the Ngaoundéré-Moundou corridor as in East Africa, between Mombasa and Kampala, for example. On the Douala-Bangui corridor, fixed costs (personnel costs, licence fees, administrative costs, insurance, communication and security costs) are more than double those in West Africa, between Tema and Bamako in particular. In general, transport costs in Central Africa remain high, which affects the price of transit operations and the international competitiveness of countries.
 

Why are the costs and delays for transit operations in Central Africa so high?

Certain exogenous factors - i.e. beyond the control of the authorities - partly explain the high costs and delays for transit operations in Central Africa. Geographical isolation, for example, significantly affects the international transit of goods. While some countries have easy access to the sea and shipping lines, such as Gabon and Cameroon, other countries, such as Burundi and the Central African Republic, are entirely landlocked and depend on land transport networks and their neighbours to access the sea to transport or receive goods.

Depending on the routes taken, goods coming from or going to Chad and Rwanda may have to pass through two countries before being transhipped to the port. Of course, the number of kilometres to the nearest port and the number of international borders to be crossed add costs and delays for traders.

Hydrography and climate also have an impact on transit costs. For example, the Oubangui River, the main affluent of the Congo River’ right bank that connects Bangui with Brazzaville and Kinshasa, is only navigable for six months of the year. The deterioration of navigation conditions due to the hydrological deficit forces Central African exporters to find longer and more expensive road and rail alternatives for the transit of goods. Climate change may further reduce the navigation season on the river in the coming decades.

Political instability and armed conflicts also affect the transit of goods in Central Africa. The fragile security situation in the Central African Republic, for example, does not allow for the smooth and rapid transit of goods. the Boko Haram insurgency threat has negatively affected trade development and the transport of goods in affected areas. Armed groups active in some parts of the sub-region regularly attack trucks carrying goods on the roads.
 

Three challenges for Central African countries  

Other factors, which are endogenous and therefore linked to public policies, further restrict transit facilitation in Central Africa. These obstacles can be grouped under three major challenges for the countries of the sub-region.

  1. Expanding technological infrastructure

    Technological infrastructure can greatly accelerate the transit of goods and reduce its cost, but the Internet network, its limited access and bad quality of connection, are major issues throughout the sub-region.

    Greater democratisation of Internet access, especially in remote or isolated areas, would also allow economic operators to benefit more from Central African countries’ efforts to increase transparency. The WTO's Trade Facilitation Agreement (TFA) provides that each country should make available on the Internet a description of its transit procedures as well as the forms and documents required for transit through its territory.

    Some countries, such as Rwanda, have decided to go further with the online publication of information on transit regulations, procedures and documents through the establishment of a Trade Information Portal, with technical support from UNCTAD.  But for economic operators to fully benefit from information, documents, and forms for transit operations online, Internet access needs to be further expanded and guaranteed.

    The under-use of information and communication technology tools by customs authorities and other border agencies is an additional obstacle to transit facilitation in Central Africa. Several border agencies do not use these tools to speed up clearance procedures and enhance security. In Burundi, for example, some customs offices are not computerised and therefore officers do not have access to the Internet as part of their duties. In addition, they are still not interconnected at the national level. In Gabon, prior to the current transition to ASYCUDA World, the various customs offices were equipped with independent servers and were not connected. The implementation of ASYCUDA World allows the centralisation of servers and the interconnection of customs offices.
     

  2. Filling the physical infrastructure gap

    Central Africa suffers from a severe lack of physical infrastructures that needs to be addressed. According to the World Economic Forum, road infrastructure in the sub-region is deficient and inferior to the rest of the continent. The DRC, for example, ranks 138th in the world (out of 141 countries) for the quality of its road network, while Chad ranks last.

    Roads are generally partially paved and lack maintenance, including in Cameroon, a major transit country in the sub-region. Barely 45% of the road section between Douala and N'Djaména is considered "in fair or good condition.” In 2019, the Regional Committee for Trade Facilitation in Central Africa noted that failure to comply with axle load standards by transporters also contributes to the deterioration of road infrastructure.

    Economic operators in Central Africa complain about the poor condition of roads, which can lead to premature or accelerated wear and tear of road vehicles, increase breakdowns, and make certain stretches unsafe for driving.

    The lack of bridges over some rivers is also an obstacle to the international transit of goods. For example, the construction of the proposed rail bridge between Brazzaville and Kinshasa would greatly facilitate transit to/from the port of Pointe-Noire and contribute to the strengthening of regional transit corridors, by eliminating the need for goods to be transported by river barges. Studies show that the construction of this bridge would significantly reduce the costs of transporting goods, which until now have had to cross the river by barge.

    Rail networks are disjointed and scarce and should be extended to new regions. For example, rail does not cover major regional transit corridors, notably those opening up the Central African Republic and Chad. On the Douala-Bangui axis, rail covers 884 km, so goods must be transported by road over 566 km, while on the Douala-N'Djaména axis, rail can only cover 556 km of the 1830 km corridor. Major investments are needed for the construction of new road sections, ports, logistics platforms and border posts in Central Africa.
     

  3. Strengthening national coordination and regional cooperation

    National coordination and regional collaboration on transit is facing difficulties in Central Africa. Firstly, the lack of coordination at national level leads to blockages of goods in transit along the roads as well as the multiplication of controls by the different agencies. At ports, goods often must be transhipped because of the refusal of shipping lines to send containers to landlocked countries and the refusal of traders to pay for demurrage, which can accelerate the deterioration of goods and increase transit costs. In addition, road freight permit systems and freight allocation agreements put in place by some countries also hamper the smooth flow of regional transit.

    Moreover, Central African countries’ multiple membership in regional economic communities (RECs) does not facilitate cooperation within the sub-region. Although all Central African countries are members of ECCAS, some have joined CEMAC (Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea, Chad), while Rwanda and Burundi belong to the East African Community (EAC), as well as COMESA, as does the DRC. Angola and DRC are also members of the Southern African Development Community (SADC).

    Fragmentation of actions due to the multiple membership of the RECs constitutes an additional challenge to transit facilitation. Indeed, the multiplication of initiatives without harmonisation and coordination does not allow for the construction of an efficient regional transit system for goods.

    In 2018, Central African countries established a Regional Trade Facilitation Committee (RTFC), under the auspices of ECCAS and CEMAC. It aims "to create a framework for consultation between stakeholders" at regional level to coordinate actions for the implementation of the AFE, including its Article 11 on freedom of transit.

    At the end of its second meeting, the RTFC drawn attention to transport issues in the sub-region, including the high costs of transport services, and recommended that member States "strengthen the transit mechanism for goods," and that the RTFC could play a greater role in the regional coordination of transit facilitation initiatives. National transit coordinators, designated under Article 11.17 of the EFA, can also contribute to strengthening cooperation with neighbouring countries by ensuring that requests for smooth transit operations are met.

    In the framework of a regional project on trade facilitation jointly implemented by the ECCAS Commission, UNCTAD provides technical assistance and capacity building for the NFCs of Central African countries, including on transit of goods. UNCTAD also provides advisory services for the implementation of Article 11 of the EFA on freedom of transit including the design of terms of reference for national transit coordinators.


For more information on UNCTAD's project for the benefit of NFCs in Central African countries, click here.

Contact the author of this article: Alexandre Larouche-Maltais | Economic Affairs Officer, UNCTAD Trade Facilitation Section | alexandre.larouche-maltais@unctad.org

This article was originally published in French.


Disclaimer
This site may contain advice, opinions and statements of various information providers. The United Nations does not represent or endorse the accuracy or reliability of any advice, opinion, statement or other information provided by any information provider, any User of this Site or any other person or entity. Reliance upon any such advice, opinion, statement, or other information shall also be at the User's own risk. Neither the United Nations nor its affiliates, nor any of their respective agents, employees, information providers or content providers, shall be liable to any User or anyone else for any inaccuracy, error, omission, interruption, deletion, defect, alteration of or use of any content herein, or for its timeliness or completeness, nor shall they be liable for any failure of performance, computer virus or communication line failure, regardless of cause, or for any damages resulting therefrom.