Poor infrastructure in Africa pushes up input costs

7 February 2013

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7 February 2013 | Adam Leach

A lack of capacity at African ports is slowing the flow of goods and products into the continent, while poor quality telecommunications are stopping companies and shippers from tracking the location of goods for delivery.

According to Enabling trade: valuing growth opportunities published last month by the World Bank and World Economic Forum, supply chain disruptions resulting from insufficient infrastructure have led to input costs rising by up to 200 per cent in some African countries.

It found that in Madagascar, about 4 per cent of the revenues of textile producers are eaten up by supply chain barriers, including high freight costs and the need to hold higher inventories.

Bernard Hoekman, director of the World Bank’s international trade department and chair of the WEF’s global agenda council on logistics and supply chains, said: “Supply chain barriers are more significant impediments to trade than import tariffs. Lowering these barriers will reduce costs for businesses and help generate more jobs and economic opportunities for people.”

More broadly, the report argued improving infrastructure, such as transport and telecoms, is far more beneficial than eliminating import tariffs. It said it could deliver a rise in global GDP of up to 4.7 per cent. It called for governments to take a holistic approach to development that considers the “entire supply chain”.

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