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The Impact of Market Structure and Business Practices

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makers and trade facilitation advocates, as they are visible to everybody transiting along corridors. The reasons for this knowledge gap are (1) the lack of incentives for agencies and operators to be transparent in their cost breakdown, and (2) widespread collusion between government officials and agents. Even World Bank trade facilitation audits have not yet provided consistent information in this respect. Rent-seeking and facilitation payments are common in all regions, but the degree of proliferation varies among corridors: in western and central Africa, rent-seeking activity has been more prevalent than in other subregions in terms of official transit fees (irrespective of whether they correspond to a service). Table 5.2 provides a simulation of the breakdown for the Lomé Corridor. Less is known about other subregions; however, it seems quite likely that transit overheads are in the range of 30 to 100 percent of transportation costs, while they should probably be in the range of 5 to 20 percent.7

Corruption and “Facilitation” Payments en Route or at Origin and Destination A well-known and documented8 phenomenon is the multiplication of facilitation payments at scheduled and unscheduled roadblocks. This is a serious problem on some corridors (for instance, roadblocks in west and central Africa routinely add 10 percent to overheads, and these roadblocks may occur every 30 kilometers, or even at shorter intervals). However, these are usually small and predictable payments made to local police, military, or customs agents. Simulations made as part of the study on transport prices and costs in Africa (Teravaninthorn and Raballand 2008) and reported in tables 2.3 and 2.4 in Chapter 2 estimate its impact to be usually, at most, 2 or 3 percent of transportation costs. Transit initiation, or border crossing, carries the potential of much higher payment required from transit operators to customs or transport parastatal staff and also the potential for greater delay in the absence of such payment. These payments also entail several indirect effects that are harder to evaluate: • On most corridors, the level of bribe does not depend much on compliance with regulations. This provides a strong incentive not to comply and thus leads to overloading and other road safety issues, which have significant consequences for road conditions. • At the port (or at borders), small bribes (to move or load containers) correspond with much larger-scale schemes of goods undervaluation

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...