be passed on to foreign consumers. African countries are generally small
suppliers of agricultural products whose prices are fixed on world markets,
giving no scope to pass transport costs on, so African producers or workers will
instead receive lower prices or wages for their efforts. In economic sectors
where production involves importing components or inputs for assembly and
re-exporting them (especially textiles and electronics) even relatively small
transport costs can have a substantial impact on final costs. The very sectors
characteristic of successful export-led growth stories (most often in Asia) are
those where high transport costs have the most impact, giving Africa a double
disadvantage.
The IMF estimates transport costs based on what the process of importing
and exporting adds to the basic costs of production (freight, insurance etc.).
The biggest influences on transport costs are the distance of the country from
core areas of the world economy and whether it is landlocked. The data show
that the median landlocked country faces 50 per cent higher transport costs
than the median coastal nation (Gallup and Sachs,1999). Not surprisingly half
the world’s trade takes place among countries located within a 3,000 km radius
of each other. In 1990 the average distance of Sub-Saharan African countries
from their trading partners was over 7,800 km. Africa is also fragmented into
nearly 50 countries, each with on average four neighbours, many of which
must be crossed and the costs and delays of customs clearance be borne in
order to reach the coast. It costs more to transport a vehicle from Abidjan (Côte
d’Ivoire) to Addis Ababa (Ethiopia) than to ship it from Abidjan to Japan.
In Sub-Saharan Africa in 1990–91 transport costs (approximated by the
total net freight and insurance costs of exporting) were equivalent to about 15
per cent of the value of the region’s exports. For ten countries this exceeded 25
per cent of total exports and for Somalia and Uganda it exceeded 70 per cent.
Transport costs averaged 42 per cent for the ten landlocked countries in the
sample and 17.5 per cent for the coastal economies. For all developing coun-
tries as a group these payments averaged only 5.8 per cent. Between 1970 and
1990 transport costs fell in Asia (from 8 per cent to 5.8 per cent) and increased
in Africa (from 11 per cent to 15 per cent). Transport costs are much greater
than policy-induced constraints on trade. These numbers compared with an
average tariff of 0.5 per cent on exports from SSA to the US between 1974 and
1993 (Amjadi and Yeats, 1995). Data from the early 2000s show that transport
costs in Africa were still almost double the world average (Naude and Matthee,
2007). Not surprisingly trade with the rest of the world is on average 60 per
cent less for landlocked SSA countries (Coulibaly and Fontagne, 2005). Box
11.2 shows how Uganda’s landlocked position imposes significant costs on
exporters.
Geography and natural resources
In Guns Germs and Steel: A Short History of Everybody for the Last 13,000
Years,Jared Diamond (1998) presents the wonderfully engaging argument that
236 Patterns and Determinants of Economic Growth