EuropeAid Political Economy at Work Brussels - 11-12 January 2011 Paolo Ciccarelli Infrastructure Unit (Transport) Directorate for Development and Cooperation
Mar 27, 2015
EuropeAid
Political Economy at Work
Brussels - 11-12 January 2011
Paolo CiccarelliInfrastructure Unit (Transport)Directorate for Development and Cooperation
EuropeAid
The development chain in Transport
Transport Cost Reduction
Transport Price
Reduction
Socio- Economic
Growth
EuropeAidAnalysing Transport Prices and Costs
Transport Prices
Transport Costs
Profit Margin
Administrative Costs
Logistics Costs
VehicleOperating
Costs
EuropeAidHow to reduce Vehicle Operational Costs?
Historically (project approach):• Infrastructure rehabilitation projects;• Concentration on a single transport mode (roads);
Last 10/15 years (sector approach):• More focus on maintenance and Road Funds;• Capacity building for transport infrastructure
management (Road agencies, procurement,
concessions);
BUT• For Road Funds, a levy of at least 10 USD cents is
necessary, but only achieved in 4 countries;• For roads alone, under-maintenance leads to excess
capital spending of 2.4b USD a year;
EuropeAidHow to reduce Logistics Costs?Favour Regional Integration and Trade:
• Joint Border Posts
• Trade Facilitation Agreement in Regional Integration
BUT
• Including all delays, the speed on international corridors is on
average 10km/h (AICD)
5 5 5 5 4
7 9 9 6 6
36 6
2 3
6
6 6
6 6
10
15 15
8 9
0
5
10
15
20
25
30
35
40
45
Dakar Lomé Tema Conakry Abidjan
Ports
Jou
rs
Retards au Port Temps de Conduite Passages aux Frontières
Retards de Terminal Autres retards (Réparations, etc.)
Logistic Chain Productivity in West Africa (toward Bamako)
EuropeAidHow to reduce Administrative Costs?
Facilitate Transport Investments• Import Licenses• Vehicles registration
BUT• Truckers are racketed along
transport corridors
EuropeAid
By reducing Transport Costs, have we reduced Transport Prices?
Large investments together with other sector intervention:
o Some reduction of transport cost (not much as expected);
o Minimal or no reduction at all of transport prices.
Cost of providing services in Africa is higher than elsewhere
o Road freight tariff ($ per T/km):o Africa = 0.04-0.14; o Other countries = 0.01–0.04;
EuropeAidHigh Transport Prices: Cartels in the Road Freight
Excessive Profit Margins in West and Central Africa due to cartels and «freight sharing»
EuropeAidAddressing the New Challenges
Profit Margins
Administrative Costs
Logistics Costs
VehicleOperating
Costs
Rehabilitation
Maintenance
Infrastructure Management
Trade Facilitation
Cartels and protectionism
Trade Conventions not applied
« Tracasseries »
Not enough maintenance funds
Policies and Strategies inadequate
Budget not executed properly
Deregulation
EuropeAidFocusing on Governance in the Transport Sector
The Logical Chain can only hold if Governance is taken into account
Transport Cost Reduction
Transport Price
Reduction
Socio- Economic
Growth
Sector Governance
EuropeAidMoving forward• Promote a sector wide approach:
o Coherence of policy and strategy framework;o Realism and predictability of financing;o Restructured and reinforced institutions;o Efficient monitoring system;
• Support fiscal reforms:o Fuel levy, registration fees, import taxes;
• Enforce national and regional regulations:o Trade facilitation and axle load;
• Support competitive transport markets:o Policy dialogue;o Break the chain – coalition of interests;o Compensation schemes, social costs of reforms;
• Support intermodal transport:o Balance of investments roads/rail;o More transport interchanges.