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2013 BORDERLESS CONFERENCE CONNECTING MARKETS

February 21-23, 2013 La Palm Hotel Accra, Ghana

Conference Report

Février 2013

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EXECUTIVE SUMMARY The West African economy has been experiencing unprecedented growth for a full decade – about 5% GDP growth annually – and the forecast for the next ten years is positive. The region’s unprecedented economic growth holds the potential to improve the living standards of millions of people – particularly if business in West Africa expands, creating jobs and lifting incomes. The more than 55 regional companies that form the membership of the Borderless Alliance are seeking to improve the business environment to ensure this potential is realized. The Alliance’s second annual conference, titled Connecting Markets, was held on February 21-22, 2013 in Accra, Ghana, and brought together over 200 stakeholders from 16 countries, including company managers, public officials, civil society groups and development partners, for two days of presentations and discussions on the issues affecting transport and trade across West Africa. All conference presentations are available on the Borderless website at www.borderlesswa.com. The conference was generously supported by ECOWAS Commission, Ghana Shippers’ Authority, Ghana Revenue Authority, Ghana Ports and Harbour Authority, Burkina Shippers’ Council, Port of Abidjan, British American Tobacco, Bolloré Africa Logistics, Danadams Pharmaceuticals, ECOBANK, NEXIM Bank, OLAM, PASICO, Scanning Systems, UBA Ghana Ltd, Tarzan Enterprises and Tullow Oil. USAID West Africa Trade Hub, USAID Business Environments for Agile Markets (BEAM), the Government of Ghana, ECOWAS and Ghana Shippers’ Authority collaborated closely in organizing and conducting the conference. Various studies have made it clear that reduced customs clearance times have a significant and positive impact on increasing trade and export prices. A Nathan Associates 2009 study concluded that a 50% reduction in cross-border (i.e., customs) clearance times within Sub-Saharan Africa would increase volumes of trade in light and heavy manufactured goods by between 21% and 24%. Ghana’s Minister of Trade and Industry confirmed that public sector officials understand these conclusions: opening the conference, he pledged that Ghana would reduce the clearance time for transit trucks at Ghana’s borders to no more than two hours. The private sector applauded his pledge, and the Alliance is following up with the Minister to support his efforts to achieve the reductions. Also in the opening ceremony, Dr. Kofi Mbiah of Ghana Shippers’ Authority pointed out the Alliance’s primary value: it is bringing public and private sector stakeholders together to work on these issues. On behalf of ECOWAS Commission, Mr Alfred Braimah, Private Sector Director, said the regional organization continues to promote free movement of goods, people, and services. To create an enabling environment to attract investment within the region, he indicated, the ECOWAS Commission has introduced tools under its Common Investment Market Initiative such as the ECOWAS Investment Policy Framework (IPF) The conference’s first-day sessions provided a broad perspective on the causes of delays and high transport costs, with experts from across the continent and region presenting a variety of lessons learned on how to address these problems. Roberts Orya, Managing Director of NEXIM Bank, highlighted how high transportation costs and excessive transit time makes intra-regional trade uncompetitive, and makes West African transport and logistics costs among the highest in the World. . Barney Curtis of the Federation of Southern African Road Transport Associations presented on best practices in corridor management, a field which is critical to resolving issues that lead to delays and high

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costs. A panel of West African ministers similarly focused on how regional integration is critical to attracting additional regional investment. The second day of the conference included the Borderless Alliance Annual General Assembly, where members deliberated upon the Alliance’s draft strategic plan and reviewed its 2012 activity report and financial statements. Borderless Alliance President Ziad Hamoui presented a summary of the General Assembly proceedings, where members of the Alliance had the opportunity to voice their comments and suggestions to the Executive Committee and Secretariat. Members adopted the Borderless Alliance Code of Ethics in both French and English as the main document representing their willingness to abide by best practices of trade and transport. Break-out sessions during the second day focused on financing the transport value chain, improving regional payment systems (mobile money), liberalizing the freight market and improving the performance of ports. Presenters’ remarks focused on the opportunities in each of these areas, and the potential for significant improvements in efficiency – and consequently fewer delays and lower costs. Borderless 2013: Connecting Markets ended with a preliminary passing of the Borderless baton to the CEO of NEXIM Bank, Mr. Roberts Orya, as Nigerian stakeholders have accepted the challenge to organize Borderless 2014 in Lagos.

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DETAILED CONFERENCE PROCEEDINGS

DAY 1 | March 21st, 2013

OPENING CEREMONY The opening ceremony was chaired by the Ghana Minister of Trade and Industry and was attended by several high-level delegates from across the region including the Minister of Transport of Burkina Faso, Mr Baba DIENE, the representatives of ECOWAS, Mr Alfred Braimah and UEMOA, Mr Abdoulaye Nomao, the US Ambassador in Ghana and the Chief Director of the Ministry of Transport of Ghana and donors (USAID, World Bank, AfDB, JICA). Ziad Hamoui, the President of the Borderless Alliance introduced the Alliance, presented its vision and provided details of its accomplishments to date. Dr Kofi Mbiah , Chief Executive Officer of the Ghana Shippers Authority emphasized the need for the private sector and public agencies to work together to remove the barriers to trade in West Africa. US Embassy Deputy Chief of Mission Patricia Alsop, representing the US Ambassador Gene A. Cretz, encouraged the private sector and the Borderless Alliance in their efforts to improve the business environment in West Africa. The ECOWAS Director for Private Sector Development, Mr. Alfred Braimah, also pledged the support of ECOWAS to the Borderless Alliance whose visions are in line with the ECOWAS goal of regional integration through effective free movement of persons and goods and improvement of business environment... Haruna Iddrisu, Ghana’s Minister of Trade and Industry gave his own definition of ‘Borderless’ as attaining the aspirations of the founding fathers of ECOWAS. He made particular mention of his government’s commitment to eliminate informal bribes at the border and to take steps to ensure that no vehicle spends more than two hours at the Ghana-Ouagadougou border. He highlighted some initiatives already taken by the government of Ghana to facilitate trade. These include Ghana’s adoption of the landlocked concept which has resulted in improved efficiency in port clearance particularly with the participation of private investment and assisting destination inspection companies in training in classification and valuation, image interpretation and document fraud. He however emphasized that much more needed to be achieved to increase efficiency and reiterated the government of Ghana’s commitment to regional integration and removal of trade barriers. Twumasi Ankrah Selby, Chief Planning Officer at the Ministry of Transport reinforced the commitment of the Ghanaian government to support the Borderless Alliance. The US Ambassador Gene A. Cretz and the Honorable Minister of Transport of Burkina Faso, Mr Baba Diene, was also present on the panel.

IMPROVING INVESTMENT CLIMATE THROUGH EFFECTIVE FREE MOVEMENT OF GOODS & PERSONS IN WEST AFRICA Mr. Roberts Orya, CEO of NEXIM Bank, highlighted how high transportation costs and excessive transit time make intra-regional trade uncompetitive and make West African transport and logistics costs among the highest in the World. West Africa has the lowest quality of transport services, as measured by the Logistics Performance Index (LPI:

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2.19), compared to other regions in Africa (2.27-2.73) and to the rest of the world (3.01-3.99). ECOWAS believes that member countries need to enhance their commitment to implementing policies that would facilitate the free movement of goods, persons and capital, such as the operations and processes of the ECOWAS Trade Liberalization Scheme (ETLS) and the ECOWAS Road Transit Scheme (ISRT). In addition to promoting free movement of goods, people, and services, ECOWAS countries need to focus on improving the convergence of macroeconomic policies. To create an enabling environment to attract investment within the region, the ECOWAS Commission has introduced tools under its Common Investment Market initiative, such as like the ECOWAS Investment Policy Framework (IPF).

Recommendations

1. To ensure effective free movement and thereby improve the investment climate,

ECOWAS members should intensify activities on Corridor Management and Border Information Centres to reduce incidences of Non-Tariff Measures.

2. Members need to collaborate and focus on developing effective key investment policy areas such as Investment policy, investment promotion and investment facilitation; trade policy; tax policy and corporate governance.

3. Member countries should continue to support the ECOWAS Commission on the

Regional Sealink Project, geared towards improving not only the investment climate in ECOWAS countries but also the movement of goods and services.

4. The Agricultural Development Bank’s 2011-2015 Regional Integration Strategy

Paper for West Africa (RISP), especially with regard to investment in road corridors, transport and trade facilitation initiatives, should be pursued and implemented with strong political will.

BEST PRACTICES IN EXPEDITING TRADE AND TRANSPORT The Key speaker, Mr. Barney Curtis, shared experiences from Southern Africa from the perspective of FESARTA (Federation of East and Southern African Road Transport Associations). He highlighted on-going initiatives and investments in regional integration along the seven transport corridors in Southern Africa, particularly:

Developing MOUs between countries, developing corridor monitoring, and establishing tripartite working groups ( the East African Community, the Common Market for Eastern and Southern Africa and the Southern African Development Community (EAC-COMESA-SADC)

One-stop border posts being planned and implemented Immigration assistance for truck drivers

The panellists also highlighted the critical role of corridor management authorities in resolving issues and reducing the cost of border crossing.

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Recommendations

1. Engage with and advocate to decision makers for improvements across the

region.

2. Borderless Alliance should continue to support efforts in creating Border Information Centres across the region, similar to the Dakola BIC hosted by Burkina Shippers’ Council.

3. Pursue customs interconnectivity, and harmonize systems across the borders.

4. Engage institutions of higher learning and transport and logistics training schools in the Borderless mission.

5. Work towards the professionalization of the trucking market by training truck drivers

6. Provide incentives for border officials to reduce corrupt activities.

7. Facilitate movement of goods to build up value chains, especially for agro-

processing

8. Implement the ISRT effectively.

MINISTERIAL FORUM Ministers from across the region presented national efforts to remove barriers to trade, and shared successes and challenges in cross-border trade. Mr. Ablasse Ouedraogo, the key speaker and Former Deputy Director of the World Trade Organization, insisted on the fact that efficient trade means more opportunities for West Africa.

Recommendations

1. Chambers of Commerce should educate their members on their roles by

establishing an advocacy campaign directed at:

a. Heads of states, by inviting them to organize regular assessment

meetings on the implementation of the rules

b. Representatives of national parliaments, by providing them with

current information on the status and challenges of the regional

transport sector.

2. States should liberalise the road freight market, by removing the quota system between the landlocked countries and the ports where 2/3 of cargo is reserved to be carried by trucks from the landlocked country and 1/3 by the port country

3. Raise awareness to increase the comparative advantages in West Africa

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through direct investments, particularly to push states to use compensation revenues that they gained from ECOWAS in productive investments.

4. States’ tax regimes should have an appropriate level of taxes which will not

unduly encourage reliance upon the informal sector.

5. Create a mechanism to regularly review and assess the implementation of

ECOWAS and UEMOA regulations. 6. The Borderless Alliance should invite high-level transport and commerce

Ministries to be part of a committee to discuss and directly engage with the

West African private sector. 7. Private sector stakeholders should present their documented findings to public

sectors officials and decision-makers, to influence law and policing-making

processes.

DAY 2 | March 22nd, 2013

BORDERLESS ALLIANCE BRIEFING Borderless Alliance President Ziad Hamoui presented a summary of the General Assembly’s proceedings, wherein alliance members of the alliance had the opportunity to voice their comments and suggestions to the alliance’s Executive Committee and Secretariat. Following a review of the Annual Report and Financial Statements, the members present adopted these, as well as the Borderless Alliance Code of Ethics in both French and English which will serve as the document representing their willingness to abide by best practices of trade and transport in the region. The president announced that, during the General Assembly, the Borderless Alliance have also received verbal commitment from NEXIM Bank to host Borderless 2014 conference in Lagos, Nigeria, as well as a verbal commitment of Burkina Shippers’ Council to host Borderless 2015 conference in Ouagadougou, Burkina Faso.

LIBERALIZATION OF THE FREIGHT MARKET The Key speaker of the session, Mr. Fred Asiedu Dartey of the Ghana Shippers’ Authority, gave an overview of the present regional approach to freight transport and transit activities. He described a number of negative results of the present system, particularly:

transit trade trucking inefficiencies frustration of the creation of a flexible region-wide market for trucking high prices passed on to consumers uncompetitive prices of the region’s exports on the global market negative impact on the economic development of economies in the region

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The road freight industry is characterized by:

a large number of powerful associations the interests of these associations being served through the wielding of influence

at national and regional levels

Mr. Dartey proposed that stakeholders in the region should advocate for greater investment in the trucking industry. He suggested that this requires reform of the region’s legal and the institutional frameworks, duplicating the successful deregulation of the freight market initiated in Rwanda in 1994. The other speakers made comments on the expected impact of deregulation, such as:

introduction of competition into the market improvement in the quality of service own-account operators dropping non-core operations probable lowering of trucking prices

Recommendations

1. Institute a comprehensive study on the trucking industry for economic analysis of

vehicle licensing & inspection regimes

2. Countries to renegotiate bilateral agreements under ISRT 3. Revision of ECOWAS ISRT Convention

FACILITATING PAYMENT SYSTEMS FOR INTRAREGIONAL TRADE Key speaker Judd Welsh provided the background to Regional Payment Services. He

highlighted that there is very low market inclusion for financial services in West Africa,

especially among the poor. Nearly 85% of money exists outside of banking systems.

This is an improvement from 95% a decade ago, but the extent of non-banked money

dampens the economies in the region, given the risks of using cash to make large

business transactions and the hesitance of banks to finance businesses with cash.

Regulators at the Mobile World Congress and the World Bank have identified the need

to create common standards and a common policy structure which can promote

regional payment systems and increase access to financial services. Existing regulations

work fairly well in Nigeria, Ghana, and UEMOA, but not between them, presenting a

major problem for regional businesses transacting across border. Recently, fast transfer

services and regional visa cards have been introduced that allow for regional foreign

exchange transactions, greatly reducing the need to conduct business by cash, especially

for intraregional trade. However, these services continue to cater largely to the wealthy.

Cell phones provide an infrastructure that can extend financial services to groups who

have typically been excluded from the market. Cell phone transfers and payments

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decrease transaction times, especially in rural areas with restricted access to banks, and

also reduce the risk associated with conducting business with cash. A pilot program in

Nigeria has shown that the availability of mobile transactions increases the speed of

money transfers and expands local economies. Pilot programs also show that people

tend to prefer to use electronic transactions in order to remove the risks associated with

holding cash.

Mobile financial services have the potential to greatly benefit businesses in West Africa.

The technology and knowledge needed to implement mobile financial services are in

place, but West Africa still needs regional cooperation for it to work.

Types of Mobile Finance Delivery Models

Mobile Network Operator Model A cell phone company extents the SMS

functionality to provide payment services that

enable customers to remit funds to each other,

which can be collected via the cell company’s

agent network.

Transactions are self-contained in the Mobile

Company’s system, do not require a regulated

financial institution, and do not require the user

to have a bank account.

Bank Model A bank holds the license and each client is

required to have an established account with the

bank. The service provides mobile access to

normal banking services.

Hybrid Models Mobile Network Operator / Bank Model Cell phone company handles payments internally with cash in/out through operator’s agent network, but payments are linked to formal banking services with a regulated financial institution. Cell phone account is linked to account at the bank.

Government Provider/ Bank Model Government-sponsored interbank clearing

system, using smart cards that temporarily act as

a store of value and are synchronize with a formal

bank account. Mobile company provides

communications services while the government

operates the payment switch between banks.

Panelist Felix Barrigah of Ecobank highlighted the importance of introducing a new

payment system within the countries where Ecobank operates. Ecobank operates in 33

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countries in West and Central Africa. In these regions, the volume of informal trade is

three times larger than formal trade. Ecobank has been working to service the informal

market by introducing new rapid and forex payment systems that alleviate the need to

conduct business in cash or to use informal money traders. The types of payment

systems available to Ecobank customers include:

Rapid Transfers: cash to cash, cash to account, account to cash

Remittance accounts

Real-time account updates & verified payments

Ecobank has found these challenges to payment systems:

High prevalence of black market forex traders with preferential rates

Limits of $10,000 in Ghana for non-documented/audited transactions force larger

informal traders to use cash

Need for expedited ETLS Registration to help formalize trade

The second panellist, Millison Narh of the Bank of Ghana mentioned that the Bank of

Ghana (BoG) has made improvements in order to facilitate payment systems and speed

up payments. These improvements include:

Bulk payment system for salaries, pensions, etc.

Check code line: truncates checks at point of deposit significantly reducing clearance

times

BoG is trying to create an interconnected payment switch system with banks in

UEMOA and Nigeria, but regulations still prevent this system from being put in place.

Recommendations

There is a need for creating and harmonizing regulations for mobile payment systems across West Africa. This is essential for the implementation of mobile payment systems.

FINANCING OF THE TRANSPORT VALUE CHAIN During this session, the Managing Director of Nexim Bank Mr. Roberts Orya, and the Director General of SOGERIS insurance Burkina Faso Mr. Si Salifou Traoré, presented a paper on financing the Transport Value Chain in trade facilitation. About 30 participants attend the session. For Nexim Bank, the capital-intensive nature and long payback period have led to various financing arrangements, falling under three broad classifications:

1. Transport Infrastructure; 2. Fleet/Equipment; and 3. Financing Logistics Framework.

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In line with this, the bank has been involved in the financing of road infrastructure, shipping and freight services, and the Nigerian Aviation industry (where all taxes have been removed on importation of aircrafts and their spare parts). The insurance component is to facilitate loan agreements with commercial banks in transport value chain financing, and also to cushion the trader in the event of an accident, fire or any other damage that may occur throughout the transport value chain. Mr. Orya urged stakeholders to take out insurance cover for the transportation of cargo. Mr. Diouf from the Senegalese Ministry of Trade suggested that insurance companies should reduce insurance costs for SMEs involved in export, and that banks should also offer lower their interest rates to this sector. Mr. Yaya Yedan from Burkina Faso Shippers’ Council strongly advocated for affordable tailored insurance cover for livestock and cereal traders.

General Recommendations

1. Establish a strategic partnership between insurance companies and banks in

the region.

2. Encourage small- and medium-sized enterprises to use insurance as a tool to facilitate loan agreement from commercial banks.

3. Urge insurance companies to tailor affordable products to persuade traders in livestock and cereal in the region to take insurance cover for their cargos.

CORRIDOR AND TRANSPORT EFFICIENCY - IMPROVING ACCESS TO PORTS AND FACILITATING CROSS-BORDER TRAFFIC Key speaker Jan Hoffman, Chief of Trade Facilitation at UNCTAD, explained how UNCTAD has developed the Liner Shipping Connectivity Index (LSCI) to measure a nation’s maritime connectivity, using the following indicators: number of companies, range of services, largest ship, number of ships and TEUs. Connectivity boosts port activity and creates the possibility for lower freight rates for importers and exporters. Considering transit cargo, statistics show that this cargo stays longer in ports than national imports and exports, and that the ports are often used as a warehouse for transit cargo. Africa has the largest percentage of state-owned container port operators in the world. Port reform is vital because it will increase throughput and connectivity, and provide a higher income for governments as well as lower freight rates. Representatives of Tema and Abidjan Ports both made presentations. The Port of Tema emphasized that to promote transit traffic; transit cargo is offered preferential tariffs as well as increased free time. Tema port is also fully committed to promoting container business and developing infrastructure in the port to cater for this. The Port of Abidjan also indicated their intention to construct a second container terminal as a means of encouraging the increase of container traffic. The Port of Abidjan’s expansion plan also includes construction of a new quay to enable larger vessel calls, and construction of warehouses.

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The issue of dry ports was raised, and it was agreed that these could be useful since they bring goods closer to importers for goods clearance. It was noted, however, that dry ports located near to maritime ports tend to be duplications, and a second-best option. Participants noted that in many cases, it was not the distance to the hinterland but the trans-border procedures that drove up the cost of transporting the goods. The issue of ensuring safety and security within the ports was also raised.

Recommendations for the Borderless Alliance

1. Promote ECOWAS Brown Card usage during Borderless Alliance advocacy platform.

2. Intensify advocacy campaign against road harassment to reduce transport costs in West

Africa.

3. Advocate for abolition of truck queuing systems.

4. Assist the relevant authorities in improving the application/implementation of the ISRT convention

SITE VISIT - TEMA PORT, GHANA | February, 23nd, 2013

The site visit took place at Tema Port, Ghana, on February 23rd. 40 conference participants arrived at Tema port at 10:00 am and were received by the Tema Port Marketing Team. Participants included representatives of UNCTAD, JICA, CBC, AfDB, Crown Agents, CCI-BF and the Cameroon Shippers’ Council. Burkina Faso’s Minister of Transport was also part of the delegation. Tema Port representatives gave an overview of the port layout, its main activities and its expansion plans. Tema Port currently handles more than 16 million tonnes of cargo per year. Although transit trade has not grown significantly over the past few years, much larger volumes are expected in coming years. The development of the Boankra inland port, as well as a projected revamp of the rail network, are expected to give a major boost to Ghana’ s transit traffic. The port plans to increase the automation of procedures, in order to boost efficiency and improve data capture and the accuracy thereof. Creating the necessary infrastructure to increase containerization is also a dominant component in expansion plans, and will include the construction of a new dedicated terminal and off-dock facilities. After the presentation, there was a guided tour of the main port area as well as the Meridian Port Services (MPS) terminal, which handles about 80% of export cargo.

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CONCLUSION

Borderless 2013 was a huge success with more than 200 stakeholders from across the region and around the world committing to making West Africa more competitive in international trade and investment. Experts from across the continent provided a broad perspective on the causes of delays and high transport costs – and presented a variety of lessons learned on how to address them. The various forums and panel discussions served as platforms for interactive debate on a wide range of issues as well as opportunities for the promotion of regional trade within West Africa. .Various recommendations made will be reviewed by the executive committee and the Borderless Alliance secretariat who will liaise with national committees to draw up actionable plans to advocate for the needed change.