Can one stop border posts work? Part two
We take a look at what needs to be done in order to fix the inefficient border posts in the southern African region.
In part one we looked at the inefficiencies of the current two stop (or legacy) border posts and the failure of Africa’s first One Stop Border Post (OSBP) – Chirundu – and compared them to the massive and successful strides made in the East African Community (EAC) with the numerous OSBPs, which have greatly improved trade facilitation in this region.
However, the question remains: can we fix what has gone wrong in southern Africa?
The answer is yes, but it will first take a lot of political will regionally to get all member states in the Southern African Development Community (SADC) on the same page.
It will also require the participation of the private sector in what would ideally see public private partnerships (PPPs) being formed to manage newly upgraded and modernised border posts in the region.
What is it going to take to do this? It is quite clear that under the current downward trend of the global economy, governments of the member states do not, and will not, have the funds for the upgrading and modernisation of the border posts.
Donor organisations such as the World Bank, the Department for International Development (DFID), the Japan International Cooperation Agency (JICA) and the United States Agency for International Development (USAID) also do not have the funds to spend on upgrading border posts in southern Africa – especially now that the focus has changed to the Covid-19 pandemic, with all available funds being diverted to assist poorer nations in Africa.
So, how will the upgrading and modernisation of our ailing border posts be funded? The answer is simple – build/operate/transfer (BOT) developments.
The PPP model, which has been utilised for funding public infrastructure for decades, was created thanks to the need of governments to use their limited funds more efficiently.
Allowing the private sector to own and/or operate a piece of traditionally state-owned and protected (or monopolistic) infrastructure, through a concession for a fixed period of time, has reduced the strain on the fiscus.
Facing constraints on public resources and fiscal space, while recognising the importance of investment in infrastructure to help economies grow, governments have increasingly turned to the private sector as an alternative additional source to meet the funding gap.
While recent attention has been focused on fiscal risk, the private sector can also assist governments to create budgetary certainty by setting the present and future costs of infrastructure projects over time.
PPPs facilitate the development of local private sector capabilities through joint ventures with large international firms, as well as sub-contracting opportunities for local firms. They can also be structured to ensure transfer of skills, leading to national champions that can run their own local operations and eventually export their competencies.
PPPs enable the growth of that country’s infrastructure base, while boosting its business and industry associated with infrastructure development, and they enable governments to pay for infrastructure over the life of the concession, as opposed to paying for it all upfront.
PPPs also extract long-term value-for-money through appropriate risk transfer to the private sector over the life of the project.