New published report assesses level of integration of services in Africa

The 10th edition of Assessing Regional Integration in Africa X (ARIA X), the popular publication realised by the United Nations, Economic Commission for Africa (UNECA) in collaboration with the African Union Commission; the United Nations Conference on Trade and Development (UNCTAD) and the African Development Bank, focuses mainly on services liberalisation and integration in the context of the AfCFTA.

A Chapter expressly dedicated to transport services (Chapter 5) highlights the opportunities for growth in this sector, which is estimated to be worth more than $160 billion in Africa. The report states that success in realizing the gains of the AfCFTA hinges on establishing an efficient and cost-effective transport service sector. African goods are uncompetitive in price because of these cost, that are currently very high not only because of the poor status of transport infrastructure (especially of rail connectivity, which is judged as “unreliable”, as only 0,3 percent of trade in Africa is moved through this mode of transport), but also because of regulatory, institutional, and policy barriers and restrictions in the provision of cross-border transport services. Accordingly, it is proposed that the African Union Commission (AUC), Regional Economic Communities (RECs), member states and other relevant stakeholders work on harmonisation of such regulations, with the view of setting out regulatory frameworks for the different modes of transport (road, rail, maritime and inland waterways) as much as harmonised, possibly at multi-REC or continental level. We discussed about this topic in this post.

The Multi-Lateral Cross Border Road Transport Agreement (MCBRTA) developed by the Tripartite Member States is mentioned as an example. The MCBRTA provides a harmonised framework at EAC-SADC and COMESA level for harmonizing road transport policies, laws, regulations and standards in the countries that are members of these 3 RECs.

Another recommendation is to create bodies for monitoring the implementation of such harmonised regulations. In this regard, it has to be noted that in Africa there is a hyper-production of transport regulations at different levels: national, regional and continental level. The main problem affecting especially regulations adopted at regional and continental level is what can be defined “regulatory oversight”, as there are no efficient mechanisms for verifying if such regulations are applied in a coherent way or, rather, if they are not applied at all. Furthermore, there are no mechanisms for obliging African States to implement the provisions introduced by such regulations or to sanction them in case they fail to implement them. This happens because the mechanism that governs, in most of African RECs, relationships between the regional organisation and member states is the so-called "functional cooperation", which means that the regional organisation has limited authority over member governments, and limited means to enforce the effective transposition of regional policies at national level, whose implementation therefore remains, in the end, always within the competencies (and responsibilities) of the member states.

To give an example, the Kagame report of January 2017 (a report prepared by a Commission presided over the President of Rwanda Paul Kagame containing a series of recommendations for the Institutional Reform of the African Union), noted that most of resolutions adopted by the AU (not only those referred to transport, but all resolutions adopted by the EU Assembly), have not been implemented and that there is a chronic failure to implement the African Union decisions, which results in what the report calls “implementation crisis” of continental regulation. The report admitted that of more than 1,500 resolutions adopted by the AU Assembly there is no way to determine how many of them have actually been implemented at both regional and national level. This clearly shows the absence of monitoring and enforcing mechanisms for ensuring the implementation of Decisions, Resolutions and Recommendations adopted at continental level. A problem that also regards regional regulations, especially those on transport and trade.

Removing obstacles, especially at regulatory level, that hamper the provision of cross-border transport services sector (a sector that at the moment is still far from being liberalised) is expected to reduce the cost of transport, enhance connectivity, create jobs and boost the contribution of the sector to African countries’ GDP. To this end, it is proposed that policy makers draw lessons from air transport liberalization in Africa in the framework of the Yamoussoukro Decision 2000 leading to the Single African Air Transport Market (SAATM).

The Aria X report also recommends to develop trade policies at continental level to attract investments in transport services and to leverage digitalization to speed the removal of services trade restrictions, expand services trade and improve development outcomes by expanding productivity.