Corridor Aid for Trade Conference In October 2008, following a tripartite Heads of State meeting, a communiqué was issued announcing a decision to create a COMESA-EAC-SADC (Common Market of Eastern and Southern Africa – East African Community – Southern African Development Community) Free Trade Area and to harmonise infrastructure plans across the three regions. The development of the North-South Corridor was identified as the first major project under a newly formed Tripartite Task Force.

The corridor comprises two priority Nepad (New Partnership for Africa’s Development) routes: the Dar es Salaam Corridor linking the port of Dar es Salaam with the Copperbelt in Zambia; and the North-South Corridor linking the Copperbelt to ports in South Africa. Together with its adjacent spurs, the corridor services eight countries: Tanzania, the Democratic Republic of Congo, Zambia, Malawi, Botswana, Zimbabwe, Mozambique and South Africa. The South African Chamber of Commerce and Industry (SACCI) was represented at the subsequent High Level North-South Corridor Aid for Trade Conference that took place in Lusaka, Zambia on 6 and 7 April 2009. Over 1 000 delegates attended. Included were the Heads of State of four African countries, representatives from the three regional economic communities (RECs) involved, officials, business people, diplomats and representatives from the European Commission (EC), the World Trade Organisation (WTO), the World Bank, the African Union Commission and the African Development Bank (AfDB). The objectives of the Conference were to: • provide high-level support for implementing the communiqué decision made at the Tripartite Heads of State meeting on 22 October 2008 to create a COMESA-EAC-SADC Free Trade Area, and to harmonise infrastructure plans across the three regions; • secure donor, International Funding Institution and private sector Aid-for-Trade commitments for removing infrastructure constraints hampering progress towards realising more trade, higher economic growth and faster poverty reduction particularly along the North-South Corridor; and • secure Aid-for-Trade commitments from the chairs of the three regional organisations to address regulatory and administrative constraints blocking expansion of regional trade and economic growth. The ultimate aim of the corridor initiative is to provide a route that stretches from Cairo in the north to Durban in the south. The North-South Corridor is the busiest channel in the region in terms of values and volumes of freight. It is expected to become even busier in the years to come. However, if the movement of goods and people along the corridor continues to grow at the current rate, the corridor infrastructure will collapse unless remedial actions are taken. During the conference, four African heads of state – South Africa’s Kgalema Motlanthe, Zambia’s Rupiah Banda, Uganda’s Yoweri Museveni and Kenya’s Mwai Kibaki – committed their countries to deepening regional integration and intensifying political support for the wide-ranging programme. The three RECs pledged to work together towards the creation of a free trade area across their combined 26 member states. Donors, including the World Bank, the EC, AfDB, Britain, Japan, Norway, and the United States among others pledged in excess of US$1.5 billion in support of the project. African Union vice chairperson, Erastus Mwencha said that infrastructure was key to Africa’s competitiveness in the global economy. He was pessimistic about the current infrastructure challenges. He said transport constituted between 20% to 40% of production costs for landlocked countries on the continent, compared with 10% in developed nations, adding that it took an average of six days for goods to be cleared at a customs check point at many African borders. High costs and transit delays lead to lower production and trade levels, limiting the potential to raise GDP growth rates. Pascal Lamy, WTO director-general, said the North-South Corridor was an example of a highly innovative regional Aid for Trade approach that could transform competitiveness and enhance regional trade flows. The project would promote development and poverty alleviation in the southern African region and provide deeper regional integration. Such initiatives had never been more urgent than in the current global economic climate. EAC secretary-general Juma Mwapachu, current chairperson of the REC Tripartite Task Force, said the deepening of regional integration and partnership with the private sector was key to addressing the challenges of resource mobilisation and improving competitiveness. AfDB president, Donald Kaberuka said that the cost of trading and transport in the region was much higher than in the rest of the world, transport costs in southern Africa being 73% higher than in the European Union and the US. This cost could be reduced significantly through investing in regional road infrastructure that would also benefit communities, businesses, producers and governments over the long term. He stated that improvement in infrastructure was vital if the vast economic potential of eastern and southern Africa were to be realised. Discussion opportunities were limited, but it was recognised that: • Projects had to be sustainable, and the private sector had to be actively involved. • The condition of road linkages along the corridor was generally good, but some maintenance was required. Rail infrastructure required considerable investment to improve it to a level where it could provide a feasible alternative to road transport. • There was a need for improved energy supply and for the harmonisation of electricity tariffs. • The overall emphasis was on the transport of goods, with no attention being given to passenger or air transport or to projects that could improve the productive capacities of the participating countries. Non-tariff barriers to trade (NTBs) were recognised as being in urgent need of attention. These included harmonisation of customs procedures and documentation; vehicle dimensions, anomalies in quality conditions imposed by importing countries on exporting countries; differing regulatory environments in the countries and in the different regional blocs; differing state procurement and trading regimes; restrictive foreign exchange controls; differing licence requirements; bribery and corruption; and the inadequate trade facilitation infrastructure. These were all aspects on which the corridor project would focus. The following outcomes resulted from the conference: Participants valued the fact that member states had shown commitment to the identified projects and programmes by providing counterpart funding and by committing to implementing and harmonising supporting policies and regulations that were required to trigger additional and sustained funding from development partners. Participants recognised the importance of high level political commitment at the national level to spearhead and monitor implementation of agreed policy reforms that would deepen regional integration as well as their commitment to continue discussion at the next tripartite council meeting. The conference generated strong financial and technical support for the North-South Corridor; with about US$1.5bn of funding being committed by the development partners for upgrading road, rail, ports and energy infrastructure and to support implementation of trade facilitation instruments. The following needs were recognised: • To develop similar aid for trade programmes in respect of other priority regional transport and transit corridors, notably improving the central corridor from the port of Dar es Salaam in Tanzania to Rwanda and Burundi; the northern corridor from Mombasa in Kenya to Uganda, Rwanda, Burundi and DRC; and the Lamu – Southern Sudan – Ethiopia corridor. • To put in place an institutional arrangement to programme and manage the North-South Corridor pilot model. • For the identification of financing gaps and missing details to channel external finance to North-South Corridor trade facilitation and infrastructure upgrade projects. • To establish a mechanism to access and disburse the committed funds. This mechanism should include: – the identification funding gaps and missing details that prevented the channelling of external finance for trade facilitation and infrastructure upgrades and that would facilitate the development of proposals. – provide a sequence of preparation of bankable projects, implementation, and the seeking of ways in which the private sector could become involved and complement public sector investment and financing for implementation of infrastructure projects. The conference resolved to: • continue to seek additional funding for implementation and programmes along the North-South Corridor. • monitor progress, and specifically, disbursements of financial commitments, financing of projects and programmes, implementation and emerging issues. • harmonise regulations such as tariff regimes, governance, customs and immigration and transit procedures, vehicle overload control procedures and customs bonds. • create and strengthen regional regulatory bodies to better oversee the implementation and application of harmonised policies and regulations in the energy and transport sectors at a regional level. The conference further agreed that: • a tripartite fund should be established to accept funding from development partners that could be used to finance identified projects and programmes needed to make the transport corridors in eastern and southern Africa, including the North-South Corridor, more efficient. The Fund would be hosted at and managed by the Development Bank of Southern Africa (DBSA); • a project steering committee had to be established to set and manage the overall policy of the North-South Corridor Aid for Trade Programme; • a project implementation unit (PIU) would be constituted as part of the tripartite agreement and would be responsible for facilitating, co-ordinating and monitoring the progress of implementing projects and programmes; and • the North-South Corridor programme was a model Aid for Trade Programme that enabled the regional economic communities of the COMESA, EAC and the SADC, and the international community to implement an economic corridor-based approach to reduce costs of cross-border trade in sub-Saharan Africa. It sought to encourage producers and traders to be more competitive, thereby creating higher levels of economic growth, employment creation and poverty reduction. The project would also focus on taking the necessary steps to ensure that adequate power supply and other infrastructure was available to support the growing demand from industrial, commercial and domestic consumers. While the mood of the delegates was positive, it remains to be seen whether or not the pledges made materialise, and whether or not the project is implemented. Peggy Drodskie SACCI