What Does Africa Need to Develop?

M-Pesa: An innovative mobile based financial service that is transforming lives.

M-Pesa: An innovative mobile based financial service that is transforming lives.

President Barack Obama is headlining the Global Entreprenuership Summit (GES 2015), which is being held in Nairobi from July 25th. Once again issues of Africa development and what exactly needs to happen for Africa to develop will come to the fore. But what needs to happen for Africa to develop? The following short video by the Eastern Africa policy Centre in Collaboration with Atlas Economic Research Foundation, documents  through the case of M-pesa (a mobile money financial service), how a laissez-faire regulatory regime can provide an optimum environment for enterprise and development.

STRUGGLING WITH FORMAL AND INFORMAL TRADE BARRIERS

trucking

In this Study EAPC’s Executive Director, Michael Rotich, documents the litany of logistical, structural, and operational challenges that long distance truckers within the East East Africa Community face. Trucking is the lifeblood of the economy in the East African Community, mainly because three of the five member countries (Rwanda, Burundi and Uganda are land locked, with Kenyan and Tanzania the only member countries with access to the oceanic transport. Rail-transport is also under-developed meaning that every day thousands of freight trucks roll across East African borders in a network of international trade. The free flow of goods across borders is vital to economic development, a fact that is no less important in East Africa than anywhere else. But a new report from the Kenya-based Eastern Africa Policy Centre (EAPC) shows that barriers to trade are running up shipping costs and crippling growth in the region.

The study, for example, that driving a standard 20-ton container from Mombasa, Kenya to Kigali, Rwanda costs between $3,400 to $6,500. Shipping the same freight to the UK via Mombasa’s port (traversing two oceans and the Suez Canal along the way) would only cost $2,000 – $4,000. Reasons for the high costs include tariffs, various fees, corruption, and wait times averaging 13 hours just to cross a border.

The EAPC is right to worry about costs to trade in East Africa, where over 70 percent of traded goods pass along two major highways of the East African Community. High shipping costs suppress employment, stifle growth, and prevent African entrepreneurs from reaching foreign markets. You can read the EAPC’s report here. The report has already been covered by major news outlets in the East African Community such as Standard Media Group and Nation Media Group.

Download the Study Here