Building capacity to help Africa trade better

Leveraging the Trade Information Dividend for Africa


Leveraging the Trade Information Dividend for Africa

Leveraging the Trade Information Dividend for Africa

In the world of economics and trade, information is key. Economists refer to the ‘making’ of markets, which means the way in which market players come together to create a market for a product or service. Once demand and supply are established, prices can be set and the quantities traded will be determined. However, none of this will happen if there is no information available on quantities available and quantities demanded. Trade absolutely requires a flow of information for it to happen, and the more accurate, comprehensive and up to date this information is, the more beneficial the effect on trade. Information asymmetries – which refers to the holding of differential information by buyers and sellers – are a leading factor in price distortions and uncompetitive markets.

While market players require information to make efficient markets, policy makers require information on trade flows and prices in order to regulate the flow of goods and services and manage the consequent financial impacts. The very markets that fall outside the regulatory ambit of the authorities – the so-called ‘black markets’ – are those for which the authorities have no information. Either the markets are too informal or they are more technologically advanced than the current regulatory structure can handle. An example of the latter would be digitally-delivered goods such as software and entertainment.

It follows therefore that it is in the markets’ and the policy makers interests that current trade-related information is available to all parties who require it. This information, besides being comprehensive and up to date, should also preferably be centralised in the sense of being available in a ‘one-stop shop’. A trade information portal (TIP) is a website that features the following:

  • Directory of major importers and exporters, governmental trade agencies and trade-related entities and chambers

  • General documentary and regulatory requirements

  • Specific requirements by product category, such as procedures, SPS and TBT requirements

  • Market intelligence and opportunities

  • Trade statistics

Africa currently boasts multiple TIPs for individual countries – inter alia: Botswana, Cameroon, Kenya, Lesotho, Mauritius, Rwanda, Tanzania, Uganda and Zimbabwe. They range in effectiveness when ranked according to a set of characteristics for best practice.

Not all of Africa’s new TIPs host the optimum set of information, or feature desirable tools such as searchable opportunities and market intelligence. Only two of them feature ‘business connector’ modules where the user can search for details of businesses operating in specific sectors, and only one hosts a module with market prices[1]. There is no doubt, however, that these TIPs facilitate trade simply by offering a single repository of information on trade requirements, regulations and procedures for the TIP hosting country. Even in their nascent form, these portals are far better than no centralised information source at all and should serve as an example for African nations that have not yet established TIPs.

It is at the country level that TIPs have currently been implemented in Africa, but the ambition extends to the REC and continent-level. At least two regional economic communities (RECs) are in the process of establishing TIPS; the EAC and ECOWAS. These TIPs will be repositories of information for the entire REC and its members, collated and arranged consistently so that the user can compare information across REC members. Having trade information for each REC member available in one repository also assists with the assessment of standardisation, which is of more interest and use to the policy maker. Currently only the EAC has a working REC-level portal (https://tradehelpdesk.eac.int/); the ECOWAS TIP is still under construction. The EAC portal is currently not much more than an ‘umbrella’ or a container for the country TIPs, but in time it will develop into a TIP in its own right. At that point it could host REC-level market and opportunity information and possibly even tools such as landed-cost and export FOB calculators.

However, while trade information portals hold many potential benefits, they require effort and expense to establish and maintain. The best of Africa’s current country TIPs are both donor funded and technically supported, with the International Trade Centre (ITC) being the primary provider of technical support. The TIPs could become self-funding if their user base grows and is willing and able to pay subscriptions, but this will only happen once they have become established and their information and data is trusted by market players.

Perpetually or self-funded TIPs will ensure that there is ongoing management of the portal and that the information stays up to date and relevant. It would be worse to have no information than out of date information, which would be misleading to market players. Many of the TIPs host trade statistics too, which are sourced from the ITC and ultimately UN Comtrade. Here too there are challenges with the quality and timeliness of the available trade data. At the date of writing, less than half of Africa’s countries have direct data reported to UN Comtrade for 2018. Around 36% of countries have not reported direct data since at least 2013 and about 25% of this group have gaps where there is no trade data available for them at all.

When examining the sources for trade data, a proportion of African countries do not have statistical authorities reporting direct data, and there are some surprising members of this group. For example: Rwanda, Senegal and Namibia. The first challenge therefore is to establish and maintain data collection agencies, thereafter to standardise data assimilation and ensure the application of international norms and standards for data cleaning and preparation.

A continental initiative aimed at providing African trade information and data was recently established – the African Union Trade Observatory (ATO). The ATO will be a ‘supra’ TIP in that it will aim to host trade information and data for the entire continent, with the partial aim of encouraging and facilitating intra-African trade. The ATO will fall under the AU authority, located in Addis Ababa, and be funded externally and technically supported by the ITC. It will have the task of collecting relevant information and data from all member states and presenting this to users in a consistent format.

Of the many advantages of the ATO will be the ability to analyse existing regional value chains and investigate the promotion of new ones. It will also assist in understanding residual trade barriers between members states – both quantitative and qualitative. The ATO portal will be split into general and a restricted access components. The general component will offer information and data that is basically available elsewhere, such as at the ITC’s Trade Map portal. The restricted component will be for subscribers and will host far more in-depth information on market opportunities, business connections, regional and local conditions and governmental support programmes. It will also host information on tariffs, non-tariff measures, potential regulatory changes, number of voluntary standards in force, rules of origin (ROO), taxes and charges. The ATO will also host e-learning materials to enable users to quickly get up to speed on using the tools.

There exists a dividend to be gained from the current global explosion in data and information. Information is what makes markets work, and work properly, but only if this information is freely available, up to date and accurate will it be able to serve as a powerful trade facilitation tool. Africa needs to keep moving on this to leverage that dividend and expand both global and intra-African trade.

Read more in a recent tralac Trade Brief by this author, titled Initial Assessments of Africa’s New Trade Information Portals.

[1] The International Trade Centre (ITC) has recently implemented a new module on its website where up to date market prices for a range of sectors are made available. The African TIPs could pull this data straight from the ITC using the API and host it on their portals.

About the Author(s)

John Stuart

John Stuart is an economist and policy analyst with special interests in trade, economic integration, technology & ICT and economic modelling. He began his career in academia at Rhodes University and later the University of Cape Town, after which he entered private consulting first with AFReC (Pty) Ltd and subsequently with management consultancy PBS (Pty) Ltd, where he served as Chief Operations Officer. Following his time at PBS he created agri-tech startup AgriDrone, one of the first UAV startups in Africa. He has subsequently researched and written extensively for tralac and also consulted to various organisations including the UN Economic Commission for Africa and the OECD. He holds an M. Com degree in Economics from the University of Natal (Durban).

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