Sub-Saharan Africa: Effects of Infrastructure Conditions on Export Competitiveness, Third Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
United States International Trade Commission Sub-Saharan Africa: Effects of Infrastructure Conditions on Export Competitiveness, Third Annual Report Investigation No. 332-477 USITC Publication 4071 April 2009 U.S. International Trade Commission COMMISSIONERS Shara L. Aranoff, Chairman Daniel R. Pearson, Vice Chairman Deanna Tanner Okun Charlotte R. Lane Irving A. Williamson Dean A. Pinkert Robert A. Rogowsky Director of Operations Karen Laney-Cummings Director, Office of Industries Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov Sub-Saharan Africa: Effects of Infrastructure Conditions on Export Competitiveness, Third Annual Report Investigation No. 332-477 Publication 4071 April 2009 This report was prepared principally by Project Leaders Erland Herfindahl [email protected] Alan Treat [email protected] Principal Authors Chapter 1: Cathy Jabara [email protected] Chapter 2: Michael Ferrantino [email protected] Chapter 3: Isaac Wohl [email protected] Chapter 4: Joann Peterson [email protected] Chapter 5: Dennis Luther [email protected] Chapter 6: Coffee: Mark Simone [email protected] Shea butter: Dan Cook [email protected] Tropical fruit: Brendan Lynch [email protected] Natural rubber: Philip Stone [email protected] Textiles and apparel: Dawn Heuschel [email protected] Leather: John Fry [email protected] Tourism: Laura Bloodgood [email protected] Primary Reviewers Nannette Christ and Karl Tsuji Special Assistance Diane Bennett, Brenda Carroll, Andrew Gately, Joe Kowalski, David Lundy, Cynthia Payne, Laura Polly, and Danielle Vu Under the direction of Richard W. Brown, Chief, Services Division [email protected] Sub-Saharan Africa Gambia Abstract This report describes conditions in the land transport, maritime transport, and electricity infrastructure sectors, and examines their effects on export competitiveness in sub- Saharan Africa (SSA), particularly on the following industries: coffee, shea butter, and certain tropical fruit (pineapples and bananas) in the agricultural sector; natural rubber and related downstream products, textiles and apparel, and leather in the manufacturing sector; and tourism services in the services sector. Infrastructure conditions in SSA have a significant effect on the ability of firms to produce and export goods and services competitively. Relatively poor infrastructure conditions place many SSA producers and exporters of goods and services at a competitive disadvantage in regional and global export markets, increasing costs and compromising product quality, rendering both merchandise and services exports less competitive vis-à-vis exporters that may not be similarly disadvantaged. Roads in SSA are often unpaved and poorly maintained, rail networks are limited, and ports lack sufficient capacity. As a result, SSA producers often incur increased transportation costs and shipment delays. Electricity infrastructure is largely inadequate, unreliable, and poorly developed, particularly in rural areas, requiring producers to rely on more expensive on-site power generators, which further increase production costs. However, SSA governments and the private sector are implementing various strategies, including government regulatory reform, increased investment, and new applications of technology to improve infrastructure conditions within SSA, often in conjunction with neighboring countries, SSA regional organizations, multilateral institutions, and non-SSA countries. i CONTENTS Page Abstract ........................................................................................................................... i Executive Summary ............................................................................................... ix Chapter 1: Introduction and Overview ................................................. 1-1 Approach .......................................................................................................................... 1-2 Organization of report ...................................................................................................... 1-3 Infrastructure, economic growth, and welfare ................................................................ 1-3 Bibliography ....................................................................................................................1-9 Chapter 2: Synthesis and Implications of Findings ..................... 2-1 Infrastructure and production costs .................................................................................. 2-1 Direct production costs .............................................................................................. 2-1 Technology substitution ............................................................................................ 2-2 Infrastructure and export profiles .............................................................................. 2-4 Infrastructure and economic distance .............................................................................. 2-4 Transport costs .......................................................................................................... 2-5 Transport time ........................................................................................................... 2-6 Economies of scale .................................................................................................... 2-7 Infrastructure and uncertainty .......................................................................................... 2-8 Uncertainty in truck and ship arrival times ............................................................... 2-8 Uncertainty in electrical power supply ...................................................................... 2-9 Bibliography ....................................................................................................................2-10 Chapter 3: Land Transport ............................................................................ 3-1 Conditions of the land transport sector ............................................................................ 3-1 Land transport infrastructure ..................................................................................... 3-1 Service providers ....................................................................................................... 3-7 Soft infrastructure: Borders ....................................................................................... 3-10 Effects of land transport infrastructure conditions on export competitiveness ................ 3-11 Effects on international trade .................................................................................... 3-11 Effects on intra-SSA trade ......................................................................................... 3-13 Efforts to improve the land transport sector .................................................................... 3-14 Reforms ..................................................................................................................... 3-14 Investment ................................................................................................................. 3-15 iii CONTENTS—Continued Page Chapter 3: Land Transport—Continued Regional cooperation ................................................................................................. 3-18 Bibliography ....................................................................................................................3-20 Chapter 4: Maritime Transport .................................................................. 4-1 Conditions of the maritime transport sector ..................................................................... 4-2 Port infrastructure ...................................................................................................... 4-2 Service providers ....................................................................................................... 4-4 Soft infrastructure: Customs ...................................................................................... 4-6 Effects of port infrastructure conditions on export competitiveness ............................... 4-7 Efforts to improve the maritime transport sector ............................................................. 4-8 Port governance ......................................................................................................... 4-10 Investment in port infrastructure ............................................................................... 4-11 Bibliography ....................................................................................................................4-14 Chapter 5: Electricity ........................................................................................... 5-1 Conditions of the electricity sector .................................................................................. 5-3 Electricity infrastructure ............................................................................................ 5-3 Service providers ....................................................................................................... 5-7 Effects of electricity infrastructure conditions on export competitiveness ...................... 5-8 Efforts to improve the electricity sector ..........................................................................