On Life, love and Politics

"Random musings about Life, love and Politics. Just my open diary on the events going on in the world as I see it."

West Africa transport costs highest May 22, 2010

Filed under: Uncategorized — kikenileda @ 10:37 AM

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Transportation costs in West Africa are among the highest in the world only East Africa is higher, according to a study of one of the primary trade corridors in West Africa.

The route connecting Tema Port in Ghana to Ouagadougou, Burkina Faso was used for the study. The study, centred on the reason for the high cost of transportation and what can be done to reduce it, the organisation concluded that reducing transportation cost will result in the increase of export and job creation.

For instance, a study of the cost of transportation along the Tema- Ouagadougou corridor shows that it cost $4,800 (about N710, 400) to transport a container and it takes 13 to 22 days to transport container across the route while in comparison, it cost $650 (about N96, 200)to move a container the same distance within the United States and it takes only five days.

Joe Lamport, Communications and Outreach Coordinator of West Africa Trade Hub, a USAID funded project that promotes trade across West Africa carried out the study alluded to a Food and Agricultural Organisation (FAO) report that said that West Africans spend almost 80 per cent of their income on food and much of it is spent on imported products: powdered and concentrated milk, rice, tomato paste among others and so if trucking costs were half what they are now for imports, consumer prices will likely be lower.

Reasons for high costs

While stating that the bottleneck and the cumbersome documentation process in the ports are veritable reasons for this high cost of transportation, the organisation also highlighted retrogressive regulation as another factor responsible for the hike in the cost of transportation.

West African Trade Hub identified the "one-third two-third rule" between Burkina Faso and Ghana as one of such regulatory hindrances.

"The rule stipulates that two-thirds of the cargo should be carried by Burkinabe trucks while one-third can be transported by Ghanaian trucks", said Mr. Lamport.

Experts have warned that regulations like these kill competitions and competition to clear goods at the port is a factor in the reduction of cost.

The report also pointed at the stripping of containers as another hiccup militating against the prompt clearance of goods at the ports. The delay trucker experience on the way to delivering their consignment often means that they sometimes might miss the ship meant to carry the goods and sure delays automatically means added cost due to damaged goods and additional port charges.

Cutting the cost

Lowering West Africa's transport costs – among the highest in the world – is critical to poverty alleviation and food security.

"High transport costs ultimately mean consumers pay more for goods at market," said Trade Hub Director Vanessa Adams. "High transport costs make it hard for exporting companies to compete in world markets. When they cannot compete, they do not create the jobs that West Africans need." The statement further suggested that implementation of the ECOWAS integrated regional market, the elimination of truck queuing rules as well as the elimination of excessive documentation for importing and exporting and the streamlining of procedures to reduce delays will reduce the transportation cost to the level that will spur economic activities leading to the reduction of poverty.

 

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