POLICY AND INSTITUTIONAL REFORMS

Rather than being undertaken piecemeal in an effort to satisfy scorekeeping by the donor community, regulatory reforms in Africa should first be undertaken to reduce the transaction costs faced by exporters. Tariff exemptions, duty drawbacks, and rebates of indirect taxes only improve competitiveness to the extent that they are well administered and timely. This is often not the case in Africa. Duty drawback, tariff exemption, and VAT reimbursement schemes are often complex and poorly administered, resulting in substantial delays. Port transit times are long, and customs delays on both imported inputs and exports are significantly longer for African economies than for Asian competitors. Export procedures—including certificates of origin, quality and sanitary certification, and permits—can also be burdensome (Clarke 2005; Yoshino 2008; Farole 2011).

Institutional reforms are also critical to the success of services and agroindustrial exports. The regulatory regime in telecommunications is important to remote tradable services, and tourism is sensitive to the behaviour of public officials ranging from immigration inspectors to the police. Horticultural exports, because they are perishable, are particularly vulnerable to delays in shipping caused by inefficient or corrupt inspection procedures at airports. Officials have the power to use delaying tactics to cause the financial loss of an entire consignment. The relatively slow growth of air-freighted fresh produce exports from West Africa has in part been blamed on corruption at airports.