Recovery cost on infrastructure becoming non-tariff barrier to trade case of Zimbabwe Beitbridge Border Post Upgrade.

 

Recovery cost on infrastructure becoming non-tariff barrier to trade case of Zimbabwe Beitbridge Border Post Upgrade.

 

From a global perspective, movement of commercial trade across the globe has witnessed a well-coordinated transport network through economic liberalization making it possible for firms in the industrial and retail sector to register tremendous growth, with reference to the developed countries (Hanif and Kaluwa 2016). The efforts at global level have been the eradication of both tariff and non-tariff barriers with the implementation of World Trade Organisation Trade Facilitation Agreement (WTO TFA). The major thrust has been on eradication of mainly non-tariff barriers which have continued to resurface in different forms regardless of the efforts being put.

The major cost drive in Africa has remained related to transport and logistics which are high as compared to other regions. Of late the dilapidated railways systems have put pressure on road infrastructure and exposed the existing infrastructures especially border posts which are failing to cope with the demands. In Sub Saharan Africa there has been frantic efforts to eliminate both tariff and non-tariff barriers to trade. Significant strides have been made on the elimination of tariff. On the non-tariff barriers there has been paper commitment from the policy makers as member states have continued to impose trade barriers through various techniques. Several initiatives to improve infrastructure in the Southern Africa includes the North-South Corridor programme being championed both by SADC and Common Market for Eastern and Southern Africa (COMESA) with countries in the region with emphasis to rail network which has comparative advantage to road (African Development Bank, 2011).The concept of built-in use transfer being adopted mainly by developing countries is a noble idea to resuscitate the ailing infrastructure in these countries.

Most of the countries are landlocked and this creates a major challenge as they cannot access the sea and rely on other countries seaports and goods are then moved by road or rail to their destinations.  With increased costs of road freight coupled with border delays resulting in demurrage charges being levied to the exporters and importers, Africa has remained uncompetitive on global markets. Poor infrastructure renders the countries in sub-Saharan Africa to be placed at a disadvantage in the regional and global markets due to increased costs of trade, thereby making it difficult to compete on the world market (USITC, 2009).

The article highlights how the recovery cost on infrastructure is steadfastly becoming a non-tariff barrier to regional and international trade. Recently there has been various projects being done in the Southern African region with particular mention of Kazungula Bridge and upgrade of Beitbridge border post which have been done on private funds which need to be paid back. Of particular interest is the Beitbridge Border post upgrade which has already resulted in the charging of commercial trucks a fee for accessing the border being upgraded.

Zimbabwe is geographically located at a very critical position for the linkage of northern and southern countries in the southern part of Africa. Zimbabwe has been adversely affected by over two decades of economic meltdown which have resulted in the collapse of infrastructure (road, rail and other supportive infrastructure such as inland and border entry points). There have been consolidated efforts from government in the past two years to revitalise its infrastructure through domestic and foreign funding mechanisms. Beitbridge border post located to the south of the country is one of the busiest inland port in the Southern Africa and borders between Zimbabwe and South Africa. This is the gateway for both northbound and south bound cargo and travellers especially for Malawi Zambia, South Africa, and Democratic Republic of Congo (DRC) to mention a few which explains its importance to the region. Zimbabwe’s capacity to provide of predictable, reliable and cost-effective transport. logistics has been constrained due to deficiencies in road and rail infrastructure, inefficient port and transit border operations. This has seen the upgrade of Beitbridge border post being done through a built in operate transfer initiative with the private sector. The contract is between Zimbabwe government and Raubex Construction company, a South African company.

The payments for the Zimborders are done for every entrance and exit through the port which result in an increase in transport costs for both domestic and regional business. The justification for the collection of these fees has been the need to recover costs for the funding of the project. This is done during the time when business and countries are still fighting COVID-19 effects.

The concept of cost recovery should be done in a way which does not hinder trade. The charging of the cost for accessing the port comes as an additional to other various costs related to the construction of the Limpopo Bridge, Zimbabwe National toll fees and carbon tax. For instance, a 30-tonne truck passing through Beitbridge border post is now required to pay an average of USD 350.00 each time it crosses. All the costs will have a sharp increase in the road freight having a negative effect on the transport costs rendering futile all efforts to reduce it.

There is need for the government of Zimbabwe to look for a long-lasting solution to the pricing of the recovery costs of the upgrade projects. Zimbabwe has been blamed for its unilateral decision making on matters that affect the region with the case of the introduction of embargos and licences on goods introduced in 2016 through Statutory Instrument 122 of 2017.  Most transporters who are facing dire challenges due to COVID-19 have expressed displeasure to the new charges as they fees are anti-business as Zimbabwe seek to open its country for business. Lack of effective communication on the launch of the collection platforms of the new border access fees resulting in long ques which caused tension especially at the South African side where the queue of commercial trucks beyond twenty kilometres. This was followed by some minor protests from the drivers who were not prepared of the new changes and failure by the Zimbabwe authorities to have online options payments for foreign registered commercial trucks. The model to be adopted must lessen the burden on the border users that the charges are priced in a way which does not weigh down the business operations.

The war against non-tariff barriers can be won when member states’ policy makers are in conversant with the needs of the markets. It is very important for Zimbabwe to quickly look into the prices and adjust them to ensure that its exports remain competitive and also there is no diversion of transit cargo as transporters look for alternative. The regional economic communities need to dialogue with member states on decisions that affect trade flows. The launch of Africa Continental Free Trade Area (AfCFTA) brought a ray of hope to the African people and business sector as anticipation was that the continent will continue to fight against imposition of trade barriers. Regional integration as articulated in various trade instruments across the region is about creating a bigger market which removes both tariff and non-tariff barriers to trade.

 

In conclusion, the upgrade of infrastructure needs both national and regional support to ensure that the flow of traffic is not hindered across the borders. The upgrade of Beitbridge border post is a noble idea which should bring efficiencies to the delays which have been experienced across the border in the past. It should, however not come as a cost to the intended beneficiaries. There is need for the government of Zimbabwe to adjust prices being levied for this upgrade project and make the upgrade beneficial to the intended beneficiaries. With proper pricing there is brisk business for the transit cargo for local business resulting in inflows of foreign currency as they  provide goods and services for foreign entities passing thorough the country. There are also high chances of benefiting from establishing of dry ports which can be used by neighbouring countries as they seek to decongest the seaports in the region.   

 

 

 References 

Hanif R & Kaluwa E (2016) Analysis of transport logistics challenges affecting freight forwarding operations in Malawi, African Journal of Business Management Vol. 10(24), pp. 607-614,DOI: 10.5897/AJBM2016.8218

African Development Bank Group (2011). Southern Africa Regional Integration Strategy Paper 2011-2015. http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and Operations/2011-2015.

USITC (2009). Sub-Saharan Africa: Effects of Infrastructure Conditions on Export Competitiveness. Third Annual Report’ [Investigation No. 332-477, USITC Publication 4071]