Photo: BBC / AFP
This post is continuation of a previous article on regional integration in Africa.
Reducing tariffs is a great start for increasing trade within Africa, but important non-tariff barriers (NTBs) must also be reduced in order to boost trade both within and outside of the continent. In fact, the United Nations Economic Commission for Africa found the costs of NTBs in 2010 were higher than the costs of tariffs. The African Development Bank notes that, “while tariffs have progressively fallen, the key challenge to intra-African trade is non-tariff barriers that stifle the movement of goods, services and people across borders.”
What sort of non-tariff barriers exist in Africa? Infrastructure across the continent is poor, discouraging the movement of goods and people. Less than a quarter of roads are paved, and those are often filled with potholes. It’s not uncommon for airfare with a layover in Europe or Asia to be cheaper than direct intra-continental flights. Meanwhile, seaports are crumbling and rail connection is paltry.
“Thick borders” are also an issue, created by burdensome administrative procedures for clearing goods for import and export. Lines of trucks at the border lead to waits measured in days due to excessive bureaucratic red tape and burdensome administrative procedures. A report by Transparency International (TI) and TradeMark East Africa (TMEA) found that drivers at Rwanda-Tanzania customs stations spent an average of 72 hours obtaining customs clearance. World Bank economist Paul Brenton found that a truck serving supermarkets across a Southern Africa border may need to carry up to 1600 documents to comply with different countries’ requirements for permits, licenses, and other required paperwork.
Photo: Wikimedia Commons
By Ann Mette Sander Nielsen
The high level of economic development in Poland today is often accredited to the rapid implementation of liberal free market policies, or “shock therapy”, in the immediate aftermath of the collapse of Communism in Poland.
The architect behind economic shock therapy was the former Minister of Finance and Deputy Premier of Poland Leszek Balcerowicz, who earlier this year was invited by Ukraine’s President Poroshenko to design a similar economic reform policy for Ukraine, implying that Ukraine could emulate the success story of Poland.
However, Poland’s positive transition does not provide a comprehensive blueprint for Ukraine, as other social and institutional factors were imperative in ensuring the economic growth of Poland.
Real estate investors are attracted to the United States because its strong legal system protects their investment and because of the easy availability of accurate information. (Photo: Wikimedia Commons)
I recently participated in George Washington University’s 2015 Global Real Estate Conference in New York. Having been invited to share CIPE’s work developing the International Property Markets Scorecard at the International Real Estate Federation’s (FIABCI-USA) annual meeting, which dove-tailed with the conference, I took the opportunity to educate myself on the current happenings in the real estate field and see how CIPE’s work might resonate with the professionals most connected to international investment in property.
Headliners at the conference included international representatives from such prominent companies as Morgan Stanley, CBRE, Knight Frank, and Cushman & Wakefield. Mostly I learned a great deal of “inside baseball” language and can now boast a broader vocabulary, but there was another theme that kept coming up. Whether talking about mitigating risk, conducting valuation of property, or trying to determining capitalization rates, it all came down to the need for reliable information and a stable environment that allows for confident investing.
A public-private dialogue session with Senegalese President Macky Sall.
The private sector is a key actor in efforts to promote economic growth, reform the business climate, and strengthen democratic policymaking worldwide. Businesses possess the know-how to analyze economic conditions and identify obstacles and opportunities for growth, while governments have the means to pass business-friendly legislation.
From a democratic point of view, a vibrant private sector contribution to dialogue expands participation in policymaking and civic engagement in governance, improves the quality of business representation, and supplements the performance of democratic institutions.
The latest case study from the forthcoming publication Strategies for Policy Reform discusses CIPE’s experience assisting the advancement of policy dialogue in Senegal that supports market-oriented reforms and private sector development.
As Senegal’s largest, most representative and well-organized business association, l’Union Nationale des Commerçants et Industriels du Senegal (UNACOIS) has played a key role in the country’s policymaking process by engaging the government in public private dialogue. At regional and cross-regional dialogue sessions jointly organized by UNACOIS and CIPE, UNACOIS members identified the nation’s complex tax code and high tax rates for SME operators as a major cause of informality in the SME sector. With CIPE support, UNACOIS developed an evidence-based policy paper on tax reform, held public-private dialogue meetings with relevant stakeholders, and presented these recommendations to government officials.
Read about UNACOIS’s successes in reforming the Senegalese Tax Code, establishing a mechanism for regular, ongoing public-private dialogue, and reducing informality here.
Teodora Mihaylova is Research Coordinator at CIPE.
When government regulations establish a privileged position for certain companies or individuals it often creates opportunities for rent-seeking — an abstract economic concept perfectly illustrated by the plight of Khartoum’s 20,000 wheelbarrow users.
Typically, rent-seeking involves firms like regulated power monopolies leveraging their privileged position in a marketplace to extract excess profits by suppressing competition. Rent-seeking doesn’t generate wealth, it just redistributes it to those with more power and influence. The company benefits, and often the government officials involved benefit, but the rest of society loses out.
The regulations that enable rent-seeking are usually deeply entrenched and difficult to dismantle – for no reason other than the fact that someone, somewhere is benefiting from them.
The BBC recently examined a peculiar, yet classic, example of how such nonsensical regulations hamper entrepreneurship and economic growth: wheelbarrow fees in Sudan. According to the report, local Sudanese in Khartoum are not allowed to own their own wheelbarrows. Instead, they are forced to rent them from contractors who have made a deal with the local government.
“Enterprise Cities” aim to emulate the success of places like Dubai.
With rates of urbanization increasing, the idea of “Enterprise Cities” is gaining ground as countries to rethink their approach to economic policy and the best strategies to promote broad-based job creation and growth.
Driven by industrialization and the search for better jobs, millions of people are moving from the countryside into cities. This is proving challenges for governments as it creates increased demand for public services and expensive infrastructure projects to meet the needs of citizens. Globalization is also increasing competition among countries to attract multinational companies and foreign direct investment.
Widespread reluctance to implement comprehensive reforms, as well as burdensome legal and regulatory regimes, are impediments to economic growth and entrepreneurship, leaving developing countries in a difficult situation.
Special zones with autonomous regulatory systems that bolster competition and foster the growth of competitive markets are one way to cut through the gridlock and bring prosperity to the burgeoning cities of the developing world.
By David Owiro. This post originally appeared on IEA Kenya’s blog.
If you have ever taken a walk around the major towns in Kenya you will come across warning notices and signboards announcing to the world that “this plot/land is not for sale” or that “this property is not for sale.” Also, if you are a keen reader of the daily newspapers you will come across, in the back pages, notices announcing “caveat emptor or buyer beware” on some parcels of land. These are often put up by individuals seeking to enforce their property rights by deterring members of the public who are likely to be defrauded by unscrupulous groups or individuals.
And now, the National Land Commission, which is the body mandated by the constitution of Kenya to hold public land in trust, has also began placing adverts warning members of the public against buying land without carrying out background searches or relying on certificates of titles.
The reason all this is happening is that people have taken advantage of the previously weak property rights regime that allowed for exploitation and manipulation of official land and property records in order to defraud unsuspecting members of the public.