Increased Physical Access to Markets

Increasing market access is the largest area of TradeMark East Africa (TMEA)’s portfolio, with approximately 45% of TradeMark East Africa (TMEA)’s budget allocated to this area of work. Virtually all TradeMark East Africa (TMEA) activities in this area are designed to increase market access by reducing the cost of trade. This component can be further broken down into: 35% to increasing the capacity of the transport system; 9% to improving the efficiency of the transport system; and 0.4% to reducing transport regulatory costs.

Diagram: Increased market access logic and approximate budget allocations

increased-physical-access

By market access, TradeMark East Africa (TMEA) means the physical access of goods to markets, i.e. transport. The cost of this access is a component of the cost of the goods. Transport costs in East Africa (direct and indirect) are among the highest in the world. As a result, goods are more expensive for East Africans and less competitive for world markets. One key factor contributing to high transport costs is inadequate infrastructure that does not meet current and future traffic needs, resulting in congestion and delay. This delay has a cost. Even where the transport infrastructure is adequate, delay can result from inefficient use of assets. Key causes of unnecessary delay include low labour productivity, bureaucratic inefficiency, poor transport regulation, and corruption. Reducing such delays (whether due to inadequate infrastructure, inefficient use of that infrastructure, or poor transport policy) will reduce the cost of transport and thus increase the physical access of goods to markets, and therefore trade.

For these reasons, most of TradeMark East Africa (TMEA)’s activities in this area are designed to reduce unnecessary delay. Yet for our activities to actually have the intended outcome, certain assumptions must hold:

1. The activities must actually result in time savings (delay reductions).

2. The value of those time savings must be greater than the cost required to achieve those savings.

3. The net savings must be passed along from transport services providers to consumers via the price of transported goods.

4. The resulting price reductions must induce additional trade in those goods (that is, the demand curve must be elastic).

Any break in the logic chain will reduce the ultimate impact of TradeMark East Africa (TMEA)’s activities on trade. TradeMark East Africa (TMEA) is funding research to deepen the understanding of staff and partners alike of these issues. In particular, TradeMark East Africa (TMEA) is interested in gaining insights into the assumption that decreased transportation time leads to decreased transportation costs.

The table below outlines examples of TradeMark East Africa (TMEA)’s work under this strategic impact area.

Strategic outcome

Examples of contributing projects

Examples of the type of contribution expected (end of project outcomes)

Increased capacity of transport infrastructure

OSBP construction; port berths

Total number: 16

Greater trade throughput at borders and ports

Improved efficiency of transport infrastructure

IBM at OSBPs; Productivity Improvement Project at Mombasa; BRN Part A at Dar es Salaam

Total number: 17

Greater trade throughput at borders and ports

Reduced transport regulatory costs

Revision of port regulations and law in Kenya; harmonization of transport regulation in EAC

Total number: 14

Enabling legal and regulatory framework for capacity and efficiency interventions at specific points