Business in Ghana

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Corruption not the Cause of High Costs of Trucking

Posted by Business in Ghana on October 18, 2010

By West Africa Trade Hub, www.watradehub.com

For policy makers in West Africa, the key conclusion of this report is that the cost to deliver a container from Tema to Ouagadougou is about five times the cost to deliver the same container from Newark to Chicago, a route of roughly equal distance. This is despite the fact that trucker salaries in the USA are roughly 25 times higher. And the trip takes as much as four times longer.

In 2005, “everybody” knew that the high cost of transport and logistics in West Africa was due to official corruption at roadway checkpoints. The authors of this report have researched that question and, according to their findings, it seems “everybody” was wrong.

The first recommendation of this report – restructuring of trucking markets – is based on evidence from Rwanda, is striking, and is consistent with the findings of our colleagues at the World Bank in their important 2008 study, Transport prices and costs in Africa (Teravaninthorn and Raballand). We at USAID have looked closely at that analysis, find it compelling, and commend it to the reader interested in further study. Our principal concern is that the road leading to a restructured trucking market is not entirely evident. We would do well to find a way to enlist the support of the trucking industry itself.

Including restructuring the trucking market, the authors of this report have proposed 23 recommendations.

While more study will be required to confirm the impact that the implementation of these recommendations will have on the market, in the absence of strong evidence to the contrary, it seems to us quite prudent to  push forward with the authors’ suggested agenda.

This work is the embodiment of “aid for trade.” We know that West Africa has a difficult time competing in world markets, though many companies can and do compete successfully. Through our work with particular companies, we know about trade problems with a great deal of practical specificity. The problems West African companies encounter as they seek to sell their products offer us clear indications of where limited governmental resources, supported by donors in some cases, might best be targeted to achieve business expansion, higher paying jobs that add greater value to products, and ultimately, the elimination of poverty.

That is why we are here.

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