Road infrastructure stimulates trade.
According to a World Bank report titled “How Does Infrastructure Support International Trade?” » global trade has contributed to economic growth and poverty reduction over the past three decades Transport infrastructure stimulates trade that leads to economic growth and reduces poverty.
To better share the gains from trade, more road infrastructure is needed to better connect regions within a country and countries within a given area, which is the basis for improving intra-African trade.
However, high transport costs continue to hamper regional integration as large-scale investments in transport infrastructure require huge investments. However, once in place, road infrastructure can “reduce transport costs both within countries and to other countries, increasing the integration of internal and external trade”, it reads. part in the report.
- World Bank emphasizes investments in transport infrastructure
- EAC is investing in a new bypass road to link the block
- Trade growth along road infrastructure accelerates integration
Most experts agree that little is known about the variations in transport costs on different routes and about the distinct characteristics of the routes. However, this is a very valuable question as it helps us better understand the value of investing in road and other transportation infrastructure.
The World Bank report highlights the need to understand and assess how “inter-regional trade responds to changes in transport costs in developing countries, and to what extent they increase volumes for existing traders or incentivize new traders to enter the market.
Such figures would tell decision-makers the exact value of investing in a road, despite the seemingly costly and almost unnecessary upfront costs. This is the math AU officials need to make to invest in intra-African trade. The research shows that in arriving at this feasibility assessment, “both the transport infrastructure and the characteristics of the markets for transport services have an impact on the final transport prices”.
The Value of Investing in Transport Infrastructure: A Case for Tanzania
It is common knowledge that transport infrastructure helps stimulate the growth of the economies where the structure is located.
However, when the infrastructure is a road, how long does it take before the communities through which the road passes begin to benefit from its construction?
Economists say road infrastructure starts making money even before the actual construction work begins. In anticipation of an upcoming road project, vendors and contractors begin to set up shop, the first step in any town’s development.
When the actual construction work begins, many businesses sprout all along and around the job sites and small towns spring up.
This is the case of the 42.4 km Arusha Bypass Road which was launched at the EAC Heads of State Summit earlier this year in Arusha, Tanzania. The bypass is intended to relieve traffic congestion in the cities of Arusha and Moshi and promote intra-regional trade.
It is part of the Arusha-Holili/Taveta-Voi multinational road project, financed by the African Development Bank Group, and connects Tanzania and Kenya. Financing from the African Development Fund, the Bank’s concessional window, amounts to $217 million, $112 million for Tanzania and $105 million for Kenya.
These are huge numbers, but based on the World Bank report, it can be safely predicted that road infrastructure will, over time, break even and reap much more development benefits. commercial and social than the sum of the investments.
To show the importance of the road or rather the importance that EAC leaders place on transport infrastructure, the road was unveiled by former EAC Chairman President Uhuru Kenyatta and the President of Tanzania , Samia Suluhu Hassan, who were accompanied by Ugandan President Yoweri Museveni. and Burundian President Evariste Ndayishimiye, as well as President Hassan Sheikh Mohamud of Somalia.
“The Arusha bypass will not only improve trade between Tanzania and Kenya, but will also facilitate trade for landlocked regional neighbors namely Rwanda, Burundi, Uganda and eastern Democratic Republic of Congo. “commented the African Development Bank’s Managing Director for East Africa, Nnenna. Nwabufo.
She went on to highlight how the project has “delivered significant reductions in transit times, facilitated cross-border trade and improved tourist access to the region’s many attractions”.
“For example, transit time at the Taveta/Holili border, which previously took almost a full day, now takes less than two hours, due to improved road conditions and streamlined border procedures,” she said.
However, the World Bank notes that “intra-African trade remains low and constrained by poor transport links and significant delays at borders”.
According to the research findings, the report suggests that the current road network at the borders of East Africa requires more investment to support cross-border trade, especially along the North-South Corridor from South Sudan to Uganda.
It is obvious that transport infrastructure is essential for the growth of trade and the acceleration of socio-economic development in any region of the world. While African countries are investing in transport infrastructure, intra-regional projects are still lagging behind.
The connecting bypass road launched by the five presidents of the East African Community (EAC) prioritized the importance for neighboring countries to undertake joint projects to improve transport infrastructure between them.
This point is emphasized in the World Bank report; “The shipping, transhipment and distribution models mean that trade depends not only on the quality of the infrastructure in the two trading countries, but also on that of the main third countries on the trading network.”
The fact is that if two countries can come together to improve transport infrastructure, it is not enough because trade, in many cases, goes far beyond the border between two countries.
It is vital that countries in a given trading bloc, such as the East African Community (EAC), come together to ensure that all countries in the bloc improve their transport, storage and Communication.
The same can be said of large trading areas like the Trans-African Trade which spans the length of the continent. For many years now, there has been a lot of talk, what causes low sustained intra-African trade?
Inadequate road infrastructure is a major barrier to trade. As such, the World Bank report is right to highlight the need for increased investment in transport infrastructure if Africa is to expand intra-African trade. The multiplier effect of building good road, rail, sea and air infrastructure is increased trade and social integration which, in the long term, translates into improved social welfare and the well-being of the population, the objective mainstay of any development plan.