Undercover Economist

Africa’s route to prosperity is not just a rocky road

Any first-time visitor to Africa is faced with a whirl of new experiences, but the awful roads are guaranteed to make an impression. That is true even in many cities – when I visited Douala, the commercial hub of Cameroon, I was appalled to realise that a four-wheel-drive vehicle was all but a necessity.

Cameroon’s roads also made an impression on Robert Guest, author of The Shackled Continent. Guest once hitched a ride on a Cameroonian beer truck travelling the equivalent of London to Newcastle upon Tyne – about 300 miles. The journey, detouring around a collapsed bridge on unpaved rainforest roads, took four days.

More rigorous studies have also found that the cost of transporting goods around west Africa is astonishingly high. One, albeit 15 years old, went so far as to conclude that road transport in Francophone Africa was six times more expensive even than in Pakistan.

Pity the entrepreneur who wants to do business under such conditions. If goods travel at 75 miles a day, as Guest’s beer truck did, it is almost impossible to import materials or export products profitably from Africa’s backwaters. The economic geographers Nuno Limão and Tony Venables have estimated that high transport costs explain almost all of Africa’s economic isolation. Certainly, exporters have not been able to take full advantage of US and EU trade concessions.

Since the 1970s, the World Bank has been pouring money into improving African roads. That seems to make sense but, puzzlingly, transport costs do not seem to have fallen in the way one would hope.

Guest’s experience suggests why. His beer truck was stopped 47 times at police roadblocks, sometimes for hours, while the police tried to find fault and extract bribes. At one point, he protested; the gendarme patted his holster and pointed out: “I have a gun, so I know the rules.” Clearing away such corruption may not be easy, but at least it requires no great expenditure on roads.

In fact, pure extortion is not the only bureaucratic obstacle to imports and exports. The World Bank’s annual “Doing Business” project collects data on the time and expense involved in meeting official demands for signatures, permits and licences. Cameroon’s regulations require nine documents, 27 days and almost a thousand dollars in official fees to export a shipping container; and Cameroon is by no means the worst offender. “Doing Business” data suggest that about two-thirds of the time taken to import or export products is thanks to paperwork such as customs clearance.

A new World Bank study of Africa’s transport corridors has found yet another obstacle to exporters that could, in principle, be cleared away without much expense: trucking cartels in west and central Africa. The study’s authors, Supee Teravaninthorn and Gael Raballand, believe that reducing transport costs would do little to bring down transport prices: better roads, swifter customs clearance and cheaper fuel would all simply add to the profits of the trucking companies.

If this view is correct, what west and central Africa’s exporters need to reach the world’s markets is a deregulated trucking industry. And, indeed, when landlocked Rwanda did deregulate, transport prices fell quickly.

This is good news: it is easier to scrap daft regulations than to build new roads, and, according to ”Doing Business”, sub-Saharan African countries have been leading reformers of customs regulations. With more such progress, it may even become worth worrying about the roads themselves.

Also published at ft.com.