Making trade facilitation work in Africa: Lessons from the service delivery agenda

19 July 2016

At a time when countries across the African continent are deploying important efforts to facilitate trade, what can we learn from public service delivery in other areas for strengthening trade facilitation reform?
 

June 23 marked the UN Public Service Day, the official international day of recognition for the value and virtue of public service to the community and its role in the development process. From Lagos to Lusaka, leaders across the African continent marked the 22nd annual Africa Public Service Day in tandem. Saara Kuugongelwa-Amadhila, Prime Minister of Namibia, called for her government to “do all we can to support our country in building up and revitalising public service capacities. […] Policy making for inclusive growth must align voice, design, delivery and accountability for joint outcomes.”

In many respects there is much to celebrate. Public service delivery has improved markedly across the continent over the last several decades. In Southern Africa, governments, once slow to recognise the severity of the HIV/AIDS epidemic, have mobilised to distribute antiretroviral drugs to those who need them most, helping to significantly reduce the rate of new infections. Similarly, in Eastern Africa, the rate of primary and secondary school enrolment has increased markedly, with innovative information campaigns to ensure money reaches the schools. Indeed, in a 2013 Afrobarometer survey across 34 countries, these two areas – healthcare and education – had the most positive reviews, with infrastructure and sanitation garnering much less positive perceptions.

At a time when countries across the African continent are deploying important efforts to facilitate trade, what can we learn from these services for strengthening trade facilitation reform and ensuring impact?
 

Trade facilitation as a service

Governments also provide critical services related to international trade, which are starting to receive more attention thanks in part to the WTO Trade Facilitation Agreement. The World Bank’s Logistics Performance Index (LPI) surveys a large sample of global logistics operators for their views of the logistics environment, including their assessment of customs clearance services by the government. Here, sub-Saharan Africa risks falling significantly behind the rest of the developing world (see graph). The recently released 2016 LPI report highlights that the bottom quintile of countries (the majority of which are African) remain far from implementing key trade facilitation measures, such as online processing and reduction of physical inspections, while the other four quintiles continue to converge towards the top performers.[1]

If African economies are to better integrate into the global economy, especially global supply chains, then improving border clearance services is critical.
 

Lessons from the service delivery reforms for successful TFA implementation?

The workhorse for much of the analytical work on public service provision over the last decade has been the “service delivery triangle” developed in the 2004 World Development Report.[2] The framework lays out the three key accountability relationships in public service delivery: between users and providers, between citizens and policymakers, and between policymakers and providers (see Figure 2).

Figure 1: LPI - Efficiency of customs clearance subindex (by region, 1 to 5 scale)

 

Figure 2: The service delivery triangle


Looking first at the “short route”, the monitoring function of clients is a critical starting point. Importers and exporters – whether the firms themselves or designated clearing agents – interact daily with the various border agencies and are often in a much better position to understand what happens at the border than officials in the capital. Education reforms provide useful examples. Increasing the client power of parents, for example, through school management committees and public information campaigns has helped improve schooling. Parents are in a much better position to monitor what is happening in their local schools than officials in the capital.

In Kenya, the establishment of Joint Border Committees (JBCs) at the level of individual border crossings provides an interesting application of this insight. Set up with the support of the East Africa Trade Hub in 2009 and now overseen by the Kenyan Revenue Authority, the JBCs brought together the various border agencies with private sector groups to address operational challenges at specific border posts. The dialogue supported by the monthly meetings helped to shift the mindset from enforcement and control to trade facilitation and service delivery. The JBC is credited by both government and the private sector in helping significantly speed up the border crossing times from days to hours at the Malaba border post, the main artery for goods entering Uganda.[3]
 

The long route of accountability: Strengthening citizen and client voice

Turning to the first leg of the “long route” of service delivery, voice – the relationship between citizens (or firms) and politicians – is typically the most complex accountability link in the service delivery chain. How can citizens influence politicians and policymakers to improve service delivery? Here, it is useful to note the contextual differences between the provision of services for customs clearance compared to health or education. Most obviously, a much smaller subset of the population interacts with customs and border agencies compared to the millions of citizens who deal with the public health or education systems each day. This concentration of interests among traders can help reduce collective action problems faced by the general public. Moreover, multinationals or large companies can have an important voice in influencing government decision-making as these firms are often major investors, employers, and tax payers and, perhaps more importantly, ever more mobile. But conversely, smaller domestic firms may not have the needed bargaining power with respect to politicians and lack the capacity to effectively organise and lobby for improved outcomes. However, from the analysis of firm-level data across developing countries, it is clear that firms both large and small stand to benefit from trade facilitation reform, especially as opportunities open up for smaller firms to supply lead firms.[4]

Strengthening the voice of domestic consumers is another tool for strengthening this accountability link. Trade costs are ultimately passed onto consumers in the form of higher prices, but consumers are often not well organised and face the collective action issues highlighted previously. In a 2012 analysis, the World Bank found that the annual welfare losses (primarily to consumers) from inefficiencies at the Port of Dar es Salaam – due to a mix of inefficient border clearance and poor infrastructure – totalled US$1.8 billion for Tanzania and over US$800 million for neighbouring land-locked countries dependent on the Port.[5]
 

From voice to compact

The second leg of the “long route”, the compact, sets out the relationship of accountability between politicians and service providers. The 2004 World Development Report points out that “all public services providers face multiple principals, undertake multiple tasks, and produce outcomes that are hard to observe and hard to attribute to their actions.” Here, one lesson from other sectors is that better data and transparency can help create incentives for higher performance. In many parts of Africa, education reforms have included systematic tracking of learning outcomes to create school scorecards and measuring teacher absence rates. In some cases, mobile phone technology has been tried to reduce absenteeism.

For trade facilitation, measuring performance and results can be achieved through increased automation and adoption of information and communications technology, as well as measures to instil transparency. Technologies such as modern electronic single windows allow for an evolution from one-off or ad-hoc time release studies to real-time monitoring of clearance times, providing senior government officials with better tools to establish effective incentives for better performance both at the individual border officer and overall agency levels. Similarly, governments could explore the idea of publicising clearance times by border post and creating scorecards which could help to create friendly competition and further strengthen the “client power” dynamic, especially when combined with effective JBCs. The Rwanda Revenue Authority’s “Service Charter” provides an excellent example of a public service compact outlining measurable commitments to delivering transparent, predictable, and professional trade facilitation services.

Another interesting finding from the 2016 LPI Report is that customs is not necessarily the main bottleneck, but the combination of other border agencies – health, agriculture, quarantine, police, immigration, and standards – that have the worst service delivery ratings (see figure 3).[6] In healthcare and education, this type of coordination problem among numerous providers is much less of an issue, so there are fewer lessons there. Whereas reform efforts (and development partner programming) have often focused on customs reform, the other critical agencies have largely not been on the radar of the reform agenda. Many of the key tools for customs reform – risk-based management and automation – would be relevant for these agencies, too. Moreover, including them in the national-level trade facilitation committees and streamlining trade facilitation into the agencies’ mandates is equally important.
 

Figure 3: Respondents rating agency quality competence as "high" or "very high" (by LPI quintile)

 

Making the service delivery framework work for trade facilitation

The service delivery framework can provide useful insights into why public service delivery can fail, and how it can work when the relationships of accountability are strong. When looking at trade facilitation service delivery, we cannot, however, forget that border agencies play a critical role in securing national borders from a variety of potential threats, as well as collecting customs duties which are often the most important domestic source of revenue for governments. Yet, it is a false paradigm to think that the ability to deliver on this mandate must be compromised by improved service delivery.

In fact, the two go hand in hand. Automation, transparency and meaningful public-private dialogue can help to deliver better outcomes on both mandates. Much as increasing the client power of parents can affect the outcomes at the school level, strengthening the influence of the private sector, both at the border and national level, can help to deliver reform. Similarly, looking at innovative ways to bring the voice of consumers into the policy debate can also help to yield positive results.

Policy-makers and politicians can take inspiration from the broader reform efforts across the continent. The Mandela government first introduced the Batho Pele (“People First”) principles for public service delivery nearly two decades ago to radically transform the public service delivery culture in South Africa, although this has been a slow and uneven process. These core principles – from consultation and transparency, to service standards and meaningful redress – offer a “made in Africa” framework for driving the service delivery revolution needed to meet the challenges of the 21st century global economy.

 

Author: Ilmari Soininen, Consultant and former coordinator for the DFID-funded African Union Trade Facilitation Support Programme.


[1] Jean-Francois Arvis et al. Connecting to Compete: Trade Logistics in the Global Economy. Washington DC: World Bank, 2016.

[2] World Bank. World Development Report: Making Services Work For Poor People. Washington DC: World Bank, 2004.

[3] East Africa Trade Hub. “Joint Border Committees: A Look at Malaba Border.” 2013.

[4] Hoekman, Bernard, and Ben Shepherd. "Who Profits From Trade Facilitation Initiatives? Implications For African Countries." Journal Of African Trade 2 (2015): 51-70. doi:10.1016/j.joat.2015.08.001.

[5] Morisset, Jacques. Tanzania economic update : opening the gates: how the port of Dar es Salaam can transform Tanzania. Washington DC: World Bank, 2013.

[6] Jean-Francois Arvis et al. Connecting to Compete: Trade Logistics in the Global Economy. Washington DC: World Bank, 2016.

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