Corridor Management Institutions needed for efficient cross-border trade 

Corridor Management Institutions are vitally important for efficient cross-border trade, writes DEVLYN NAIDOO.

Trade corridors are characterised as geographic areas with undetermined boundaries that feature natural resources, economic and social infrastructure, and settled populations. These regions foster existing urban expansion while also forging new links between dominant cities, areas of economic development, and rural areas.

As major routes, transport corridors support various types of infrastructure, interoperability, multimodal services, and economic, social, and territorial integration. They enable the smooth, safe, and sustainable mobility of people and commodities, contributing to economic growth and global competitiveness. Furthermore, according to Kunaka and Carruthers (2014), trade and transport corridors facilitate the movement of people and goods between regions and countries, offering high-capacity transport systems and services that reduce trade and transport costs by creating economies of scale. Landlocked countries rely heavily on regional corridors, which often provide the only overland routes to regional and international markets.

Dr Juanita Maree, CEO of the South African Association of Freight Forwarders (SAAFF), reminds us that as citizens of South Africa we all have a united purpose working for SA Inc. Maree says that we should focus on the solutions, as opposed to dwelling on the challenges. We therefore have a group responsibility within a shared network – using shared infrastructure – to ensure the realisation of an efficient supply chain for our country. This emphasises the reality that rather than countries, it is their supply chains that compete.  

Sequeira (2013) states that the N4 includes the port, road, rail, pipeline, border post, and logistical services that connect northern Swaziland to South Africa’s industrial core region and the Port of Maputo in Mozambique. It also connects numerous intermediate locations in northeast South Africa (Witbank, Middleburg, Nelspruit, and Komatipoort) and Swaziland’s main sugar cane-growing districts to Maputo.

The route has gone through numerous stages of construction. It is now one of Africa’s most successful corridors, not only in terms of infrastructure and service quality, but also development impact. The Maputo Corridor handled more than 14 million tonnes of cargo per year at its peak in the mid-1970s, with the majority of this coming from South Africa.

Using private sector funding and cooperative concessioning, the two countries have encouraged the restoration of critical infrastructure including road, rail, border post, port, power, and information and communications technology [ICT]. The programme has resulted in about US$5 billion in investments along the corridor in both countries, which have focused particularly on the road aspect. Furthermore, the two governments have encouraged the exploitation of economic opportunities along the corridor, transforming Maputo into a true growth corridor. There has been a concerted attempt to connect towns along the corridor’s length, particularly involving disadvantaged communities. More than 15,000 direct jobs are estimated to have been created throughout the corridor in transportation, logistics, agriculture, and mining ventures.

While infrastructure, process, procedure, and traffic management on the N4 corridor are currently in dire straits, let us not focus on the challenges, but instead on the golden opportunity to deliver a targeted solution by establishing currently absent Corridor Management Institutions (CMIs) to service import and export cargo between the two countries.

From an economic perspective, the function of a corridor is to promote both internal and external trade by providing more efficient transport and logistics services, as noted in a 2018 World Bank report on corridor management best practices. The primary reason for designating these routes as part of a corridor is to focus attention on improving not only the routes, but also the quality of the transport and other logistic services in the corridor. This quality is measured in terms of transit time, cost for shipment of goods along the corridor, the reliability of the services, and the flexibility provided through service diversity on multimodal routes.

The legal designation of a particular collection of routes as a corridor is usually part of a government initiative to concentrate efforts on enhancing the quality of said routes’ transport services. The term “management” implies some level of control, but the wide range of demand for transport and other logistical services – as well as the enormous number of service providers – limits the ability to exert any level of control. Nonetheless, given the diversity of stakeholders and the huge number of government entities overseeing various activities inside a corridor, it is critical to have a single point of coordination. This coordination necessitates public-private cooperation to solve a wide range of issues, including infrastructure investment, transportation, and trade regulation.

Having been conclusively identified as proven vehicles for enabling trade management, CMIs are the key to efficient cross-border trade. It is therefore essential to establish a corridor management institution to support trade between SA Inc and Mozambique. On this note, I will sign off with the words of WTO director general, Dr Ngozi Okonjo-Iweala: “I believe that when you find problems, you should also find solutions.”