WASHINGTON, JUNE 16, 2015— The World Bank Group’s Board of Executive Directors today approved a US$100 million Development Policy credit, to help the governments of Burkina Faso and Côte d’Ivoire to reduce trade and transport transaction costs as a step towards promoting the development of the private sector and improving global integration in the two countries. The project marks an innovative approach to budget support as it is the first time that the World Bank provides budget support to more than one country on a regional basis under a common framework for reform agreed between the countries aimed at fostering regional integration.
The funds from the International Development Association (IDA)* include a $US50 million credit for Burkina Faso and a US$50 million credit for Côte d’Ivoire to support the First Regional Trade Facilitation and Competitiveness Development Policy Operation. The project’s primary aim is to reduce trade transaction costs along the Abidjan-Ouagadougou corridor, an important regional trade corridor, with a series of coordinated as well as joint reforms aimed at the trucking industry, maritime ports and inland gateways, customs clearances and border crossings in each country.
The high costs of transporting goods are one an important constraint to economic growth and poverty reduction in both Côte d’Ivoire and Burkina Faso. To address this challenge, the governments of both countries have developed ambitious reform programs for the transport sector, yet their implementation was hampered by the complex organization of the transport industry. Today’s project addresses previously unsolved issues affecting trade and transport and supports the efforts of both countries to coordinate their efforts around the international transit corridor linking their two economies.
“Given the importance of trade to create income opportunities and to reduce the cost of living for poor households, this operation will go a long way towards ending extreme poverty and promoting shared prosperity in Burkina Faso and Côte d’Ivoire,” says Ousmane Diagana World Bank Country Director for Cote d’Ivoire and Burkina Faso. “By lowering the high transport costs, facilitating trade and promoting regional integration, the reforms supported by this program will provide broad-based welfare gains in both countries, benefiting the producers of exported products, including farmers, the families that buy imported goods and companies that help transport these goods.”
Specifically, the project will help reduce the high costs of transport through a number of reforms, such as formalizing the trucking industry by developing professional criteria for new truckers, and establishing effective enforcement of regulations, including axle load requirements. By improving trucker’s access to transport contracts and other bilateral agreements, the project will help modernize the trucking industry. Actions to reduce high cargo handling prices and port charges in Abidjan, boost urban access to ports, and improve parking and storage availability for transport equipment will help improve the efficiency of operations at ports and inland gateways so transporters can increase the number of round trip hauls.
To reduce the time spent at border crossings between Côte d’Ivoire and Burkina Faso, the project will support border management modernization and inter-agency coordination, implementation of better transit procedures, and apply lessons learned from experience with integrated border management within and between countries in other corridors, such as the Northern corridor in East Africa.
“This program’s focus on lower transport prices and more efficient logistics services for the movement of food staples will enhance food security throughout the region, by preventing the loss of crops during transport, while helping to strengthen the competitiveness of traditional exports such as cattle from landlocked countries in the Sahel,” says Volker Treichel World Bank Task Team Leader for this Project.
“The corridor approach that forms the foundation for this program calls for input and coordination by both countries and will create additional incentives for reforms in individual countries while presenting new incentives for collective actions that create added economic and welfare benefits at the regional level,” says Ibou Diouf World Bank Co-Task Team Leader for this Project.
*The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.8 billion people, the majority of whom live on less than $2 a day. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $18 billion over the last three years, with about 50 percent going to Africa.