Justine Greening: supporting trade in East Africa
International Development Secretary's speech to business leaders and representatives from the Tanzanian government at the Logistics Innovation for Trade (LIFT) event.
Hon. Dr. Charles Tizeba, Deputy Minister of Transport Hon. Abdulla Juma Abdullah, Deputy Minister of East African Cooperation Hon. Dr. Enos Bukuku, Deputy Secretary General of the East African Community Mr. Frank Matsaert, Chief Executive Officer, TradeMark East Africa
Distinguished colleagues, ladies and gentlemen,
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I am delighted by this opportunity to return to East Africa. I am always struck by the incredible vibrancy of its people and the potential for investors.
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This visit reflects my determination to increase the focus of DFID on private sector development as a critical determinant of growth, jobs, incomes and poverty reduction.
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Trade (especially exports) is critical to this agenda, and Africa’s ability to boost its trade and its share of global growth will not be realised without major improvements to its infrastructure - including regional infrastructure - a priority in East Africa with its landlocked countries.
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I’m struck by some of the alarming statistics on transport costs. For example, freight costs per km are 50-70% higher than USA and Europe; and freight logistics costs in East Africa are 42% of total import value; 1 of highest cost regions in world.
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The UK is determined to help, but public financing will not fill these gaps alone. Africa’s infrastructure deficit won’t be resolved without private investment.
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I’m encouraged that African governments are acknowledging the importance of private financing mechanisms. National and regional strategies that enable public-private partnerships are essential to create the private sector confidence that is needed to close the financing gap.
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Progress is being made. Look at private sector participation in the ports sector for instance. Over the past decade in sub-Saharan Africa, there have been 40 seaport projects involving the private sector, with investment of U$4.8 billion. The UK government, through our support for PIDG and its investments in ports like Tema in Ghana and Cotonou in Benin, has played a role in this.
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Firm level interventions are critical too, but they won’t compete if logistics costs remain so high. Africa needs business to develop, and business needs logistics. High logistic costs seriously erode the competitiveness of goods from East Africa, reducing trade, growth, jobs, and increasing poverty.
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UK firm level expertise and experience has much to offer, and I’ve brought some of this UK expertise with me to show them the opportunities that exist.
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I’m pleased to recognise Chris Tancock in the audience from Pall-Ex logistics. I’m also pleased that Hilary Devey, inspirational founder and CEO of Pall-Ex is considering a role as an advisor for TMEA on logistics. Hilary has shaken up the UK logistics market over the past 17 years, and I believe she can help us to do the same in East Africa.
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We’re very excited by the new LIFT challenge fund. While logistics solutions and technology are already available, LIFT can play a major role in reducing the risk of investing in these technologies. Use of these technologies (vehicle and merchandise tracking, driver monitoring, supply chain integration) can help both to increase competitiveness and to reduce corruption (by reducing face-to-face interaction).
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LIFT will complement the tremendous work being done by TMEA, the only programme dedicated to improving transit efficiency in East Africa.
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The UK is the major investor in TMEA, but it’s a very collaborative programme also supported by Belgium, Denmark, Finland, Netherlands, Sweden, USA (and soon Canada).
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I’m pleased to announce that the UK has scaled up its support to TMEA by over £100 million during 2013, and this includes a recent increase of £10 million specifically to allow the launch of LIFT today.