High transport costs impede ECOWAS trade

Hanna Tetteh, Minister of Trade and Industry, says achieving competitive transportation costs will boost trade among ECOWAS member-states.

“It is well known that transportation costs are extremely high within countries, and this has seriously impeded efforts towards improved sub-regional trade,” she said.

Available statistics show that intra-African trade is low; representing on average approximately 10 percent of total exports.

Drivers encounter about 15 control points operated primarily by police and customs agents.
These barriers cause on average a total of 160 minutes delay and payment of the equivalent of US$11.84 in bribes between Tema and Paga. These bribes are paid by the transporter and are included in the trucking price.

It also takes approximately 13 to 22 days to bring a container from a vessel in Tema port to the importer in Ouagadougou, costing US$4,800 - whilst from Newark to Chicago in the US it costs about US$650 and takes just five days. This is remarkable when labour costs in the U.S. are 25 times higher.

Ms. Tetteh made this known in Accra at a forum on regional trade solutions with participants drawn from financial industry, traders, exporters and importers, business executives and policy makers and entrepreneurs from the sub-region.

Speaking under the topic ‘Ghana’s Trade Incentives and ECOWAS Policies as Tools to Promote Regional Trade’, she said: “Although ECOWAS countries have made some progress in enhancing sub-regional trade, there are enormous challenges that need to be confronted.

“In the West African sub-region and ECOWAS states, two critical protocols that directly impinge on sub-regional trade promotion are the ECOWAS protocols on the Free Movement of Persons, Goods and Services and, more importantly, the ECOWAS Trade Liberalisation Scheme (ETLS).”

She explained that ineffective implementation of the various trade protocols and ETLS collectively signed and agreed by ECOWAS members is costing the sub-region millions of dollars in trade forgone.

The lack of competitive productive capacity as a result of supply-side constraints is considerably impeding efforts towards enhancing intra-sub regional trade, Ms. Tetteh mentioned.

“Any sustainable development programme, whether in the case of trade in goods or services, requires that supplies are delivered in the right quantities, at the right price and at the right time.

“The weak or inadequate supply base of most countries of the sub-region therefore impedes efforts towards enhancing sub-regional trade.”

She proposed that ensuring a proper implementation of the ETLS and thriving trade in West Africa would require extensive infrastructure upgrading in the form of roads, rail networks, ports and ancillary services.

These, she said, are largely non-existent or at best inadequately developed in the sub-region and there is urgent need to ensure that steps are taken to provide these facilities.

“The potential of increased intra-ECOWAS trade is enormous. It would therefore be in the interest of member-states to address these challenges confronting us so that we could draw on benefits thereof.

“Key among the challenges is policy and the political will for implementation at the national levels, mobilisation of huge financial resources for infrastructure and institutional challenges, and human resources capacity constraints,” Ms. Tetteh remarked.