The political side of transport

It’s often said that more could be done within the Southern African Development Community (SADC) region to make cross-border trade less difficult, expensive and time consuming. We explore the ideas of liberalising market access for the road-freight industry and harmonising traffic legislation in the region

The SADC region consists of 15 member states – three of which are the islands of Madagascar, Mauritius and Seychelles. Between the remaining 12 are six landlocked states, 14 transport corridors and ten regional ports.

According to Shaka Yesufu, a senior lecturer of law with The National Traffic Police Academy, these corridors are major regional transport routes, along which a significant proportion of regional and international imports and exports are carried by various transport modes.

Yesufu recently spoke at the 2016 Southern African Transport Conference. He notes that regional infrastructure development, including surface transport routes, creates a larger market and greater economic opportunities.

“The development of infrastructure is critical for promoting and sustaining regional economic development, trade and investment and will contribute to eradication of poverty and improved social conditions,” he adds.

“In recent years the SADC region has made significant progress in development of regional infrastructure, including transport and communications systems, which are fundamental to cooperation in the region,” says Yesufu.

While Yesufu went on to discuss the harmonisation of traffic laws within the region, Bevuya Mdlankomo, researcher within the Research and Strategic Projects Unit at the Cross-Border Road Transport Agency, discussed the region from a legislative and market-oriented perspective.

Mdlankomo notes that, in the context of a developing region like SADC, road transport is important as it carries the most regional traffic and enhances regional trade, which is vital for economic growth.

“The need for market liberalisation of road transport in the context of the SADC is also premised on the need to respond to the high costs of importing and exporting within the region, in comparison with the world markets – based on data from the World Bank’s cost of doing business database,” he says, adding that the cost of imports and exports are approximately three times that of the world’s cheapest markets.

So, the SADC region could benefit from developed infrastructure, harmonised laws and open markets. Is it possible to achieve this and, if so, is the region ready?

“Attempts to harmonise legislation within the SADC region have not been without stumbling blocks,” says Yesefu. Barriers have included that it is unaffordable for some member states, the lack of a single currency (such as the euro for the Eurozone), language barriers, diverse legal systems, a lack of security and stability and the inability of the SADC to properly market its vision, objectives and services.

“There are certainly distinct benefits to be gained from harmonising traffic legislation. It is a sound objective to work towards. One of the founding principles of the SADC is to promote free trade facilitated by free movement of goods and services among all member states.

“However, the reality appears to contradict this principle. In order for the harmonisation of traffic legislation in the SADC region to be implemented successfully, the barriers must be addressed adequately,” he notes.

Likewise, Mdlankomo says that, while the region had agreed in 2010 on a linear approach to achieve market liberalisation, implementation lagged behind. “According to the SADC, some of the challenges identified have been the lack of political buy-in, the issue of national interest versus regional benefits, and fear of unfair competition in the region,” he explains.

Through engagements and consulting, in 2013 it was agreed in principle to adopt the same approach as the European Union (EU), called quality regulation. The basis of this is that regulatory authorities, along with governments, should define measurable, practical standards for the operation of transport.

“In essence, the operators should comply with specific licensing requirements in order to enter the market, which is different from the current biased regulatory framework that requires operators to have a permit to operate. Any operators that can meet these standards will be able to enter the market. In this way the market will be liberalised, since entry will be based on complying with minimum standards and regulations,” Mdlankomo notes.

As part of his research, Mdlankomo conducted a study among stakeholders (operators) to assess their awareness on the topic. Interestingly, it was found 40 percent of the operators don’t understand the implications of market liberalisation. “This is a major hindrance to political lobbying, with regard to achieving liberalisation through the SADC protocol implementation,” Mdlankomo notes.

It was found, however, that 42 percent of respondents agreed that quality regulation can drive market liberalisation within the freight industry in the SADC. However, 68 percent disagree that permits should be removed to encourage liberalisation.

“Operators understand the value of monitoring the goods and passenger flow between countries. Furthermore, stakeholders’ responses indicate an understanding that there is a need to filter access in terms of who can be allowed to transport goods across borders,” he explains.  

Regarding market restrictions, 28 percent of the respondents disagreed with these being removed.

“Major shortcomings of allowing open market access are the fear of competition and the risks associated with contraband, as well as illegal or inferior goods, penetrating the market,” Mdlankomo continues.

Mdlankomo recommends that some of the progressive, or gradual, liberalisation options that have improved trade and economic development in trading blocs like the EU and the North American Free Trade Agreement (NAFTA) could be beneficial for the SADC.

“It was also evident that progressive liberalisation can be advocated within the SADC environment through adopting regulatory reform to remove the barriers that inhibit a country’s ability to develop and grow in the case of cross-border trade,” he says.

With this much to consider, FOCUS will continue to keep readers updated of any developments.