Made by United Nations Special Adviser on Africa and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, Cheick Sidi Diarra, at the World Bank's Annual Sustainable Development Network Week in Washington on 21 February 2008
Ladies and Gentlemen,
It is my great pleasure to participate in the annual sustainable development network week at the World Bank to speak on transport for Africa. Let me also express the appreciation of the United Nations for the very important role that the World Bank continues to play in Africa’s development in general, and in strengthening Africa’s infrastructure in particular.
Globalization and regional integration require effective regional transport and communications infrastructure to integrate markets, achieve economies of scale, encourage participation of the private sector, and attract foreign direct investment and technology. The vast majority of the people live in the poorest and most vulnerable countries that constitute my mandate, namely Africa, the least developed countries, landlocked developing countries and small island developing states, do not have access to the viable means for transport to seize the opportunities offered by the rule based international trading system. It is, therefore, timely that this meeting gives us the opportunity to emphasize the urgent needs and challenges confronted by these countries once again.
There is an urgent need for supporting African countries to develop affordable transport systems that would promote trade expansion, economic growth and competitiveness. Their dismal status of transport systems and connectivity continues to be the major obstacle to Africa’s efforts to attain millennium development goals. The road transport is in very poor condition which remains the dominant mode of transport, accounting for about 90 per cent of interurban transport in Africa. Less than a third of Africa’s 2 million km of roads are asphalted with the low density of 6.84 km per 100 square km, compared to 12 km in Latin America and 18 km in Asia. The railway network interconnections are still disjointed and poor, and availability of rolling stocks is very limited. The benefits offered by air transport are not fully seized, links between the different subregions are not adequate, further liberalization is needed to boost the competition. The Sub-Saharan Africa faces much larger indirect costs of production than any other region of the world. In the case of strong export performers, indirect costs tend to absorb not more than 12-20 percent of total production costs, whereas the same figures are as high as 20-30 percent in SSA. Analysis also show that more than half of the indirect costs are related to infrastructure, with 31 percent relating to transport alone.
Africa has much higher proportion of landlocked developing countries than any other parts of the world. One half of 31 landlocked developing countries, are African. Geographical realities coupled with critical infrastructure deficiencies, as well as cumbersome border crossing procedures, pose more significant impediments to trade for landlocked developing countries than tariffs do. On average, landlocked developing countries pay almost 4 times greater for transport services than the most favored nation tariffs. The transport costs in Africa are among the highest in the world, which means a high cost of doing business and difficulties to compete on the global market. For African landlocked countries, transport costs can be as high as 77 % of the value of exports.
Because of such realities, landlocked developing countries find themselves among the poorest developing countries today, beset with anemic growth rates and deteriorating social conditions. With economic stagnation, landlocked developing countries score poorly on many human development indicators. Of the 15 countries at the bottom of the 2006 Human Development Index, 9 are landlocked. The widening development gap between landlocked developing countries, especially those in Africa, and the rest of the developing world is a clear and unmistakable trend. The major macro-economic indicators point to the fact that these could be left increasingly by the wayside in the foreseeable future, unless they can be vigorously helped to surmount their geographic handicaps.
The United Nations has recognized this reality and made continued efforts to assist them. The UN Millennium Declaration urged their development partners to increase the financial and technical assistance to landlocked developing countries to help them overcome the consequences of their geographical handicap. Subsequently, the Almaty Programme of Action adopted in 2003 at the UN Conference on landlocked developing countries provides a global framework for partnerships to implement action oriented measures in five priority areas such as fundamental transit policy issues; infrastructure development and maintenance; international trade and trade facilitation; and international support measures. Because of the importance of the issue, the General Assembly has decided to conduct a midterm review later this year to assess what has been achieved so far, what could have been done better, and how the second half of the implementation period could be effectively utilized to advance on the ultimate goals to assist landlocked developing countries in their effective participation in the international trading system.
Cooperation across borders with the transit countries is crucial for decreasing transport costs and establishing efficient transit transport systems. Transits will be easier and less costly for both landlocked and transit countries if implemented in an integrated environment. If administrative or customs delays are minimized and investment decisions taken with a common perspective, the benefits derived by landlocked and transit countries are increased and transport costs lowered. Improvements in transport and transit facilities and an increased traffic volume will eventually benefit coastal as well as landlocked countries. This realization has led landlocked and transit countries on all continents to get engaged in the process of building or planning transit or access corridors.
The infrastructure is not the only factor that contributes to the high trade transaction costs in Africa and landlocked developing countries. Trade facilitation equally plays a major role here too. The initiatives undertaken by the World Bank to develop logistics indicators and the annual Doing Business Report are important in identifying areas for intervention to reduce trade transaction costs. For example, computing of the recent Doing business figures shows that, landlocked developing countries take an additional 22.9 days for goods to be imported and 28.6 additional days for goods to be exported. Physical infrastructure, or ports and inland transport, accounted for only a quarter of the delays while pre-arrival documents, customs and inspections accounted for 70 % of total delays. These numbers bring attention to the need for increased trade facilitation and reforms for efficiency in transit transport. Together with your organization, the WTO, and other organizations within the global community, we recognize the importance of internationally binding rules in this area. Therefore, the WTO negotiations on trade facilitation are so important and relevant to Africa and landlocked developing countries. The WTO work programme on Aid-for-Trade is critical in order to help countries integrate into and benefit from global markets – and build capacity to take advantage of any new market openings.
The cost implications of meeting the requirements in establishing and maintaining efficient transport systems are of such a magnitude that African countries cannot accomplish such a formidable task on their own. With the low rate of return of infrastructure investment, international financial assistance continues to remain the major source for infrastructure development to break the deadlock. Donor-supported public funding is an essential prerequisite for boosting or upgrading supply capacity and infrastructure building in African economic and social development, and has important spill-over effects on other sectors. At the recent meeting of the Africa MDG Steering group it was estimated that the overall financing requirements for the 22 countries, including both investment and maintenance, amount to US$14.2 billion per year. About 85% of this total relates to the roads sector. This will directly generate jobs and income for more than 8 million of rural construction workers and for maintenance workers.
The international community increasingly recognized this necessity. In this regard, I am particularly pleased to mention the Gleneagles agreement by the G8 to boost growth, attract new investment and contribute to Africa’s capacity to trade through the establishment of the Infrastructure Consortium for Africa, jointly supported by African countries and by the European Commission, G8, and key multilateral financial and development institutions. This is of course welcome development, there is more to be done in concerted manner. Although ODA to infrastructure in SSA has increased by 20% to US$ 5.3 billion in 2006 since the Gleneagles summit, current financing flows still only meet about half of the estimated needs.
Let me emphasize the importance of the full and effective implementation of the New Partnership for Africa’s Development (NEPAD), objectives of which were built around the MDGs to halve the poverty by 2015. Infrastructure development has been a key priority for both the African countries and their development partners. The Short Term Action Plan of NEPAD outlines the priority infrastructure projects and programs in energy, transport, water supply and sanitation, and information and communications technology sectors. The NEPAD transport program provided us with a clear set of priorities aimed at establishing trade corridors without border and barriers; viable roads to bring Africa together, efficient ports; and safe, secure and efficient skies and airports. The international community should double its support to NEPAD, which is the major Africa led and Africa owned initiative.
The United Nations is fully aware of the urgent need for assistance to address major development challenges confronted by Africa in an intensified, focused and coordinated manner. This is why the Secretary-General established the MDG Africa Steering Group recently with the key UN system and other major multilateral organizations. The World Bank is the key stakeholder in this endeavour. The main purpose of this initiative is to undertake practical steps for coordinated international efforts on the MDGs, to improve aid predictability; and operationalize MDGs at the country level.
I hope today’s discussion will serve as an excellent contribution to our concerted search and efforts to channel greater support to Africa, especially in the transport sector, on priority basis.
Thank you very much.