3.1 Need for further liberalization of the trade sector
3.2 The need for better organized trader associations
3.3 Training for traders and government officials
3.4 Financing private sector FSDS operators
3.5 Promoting consumer associations
3.6 Improving security on roads and at the borders
3.7 Promoting regional economic integration
Between the two extremes of countries where the state is still heavily involved in importing food and those where private oligopolies control all operations, there are those where much of the private sector still lacks initiative and organization. Trade liberalization therefore needs to be pursued not only through abolishing state monopolies, but also by controlling the private monopolies that emerge because they rarely take into account the distributional goals that underlie the economic policies of governments.
Healthy competition should be encouraged between operators by abolishing price controls and the non-transparent administrative allocation of foreign currency. The fair trade units found in most African countries, which are either part of the ministry of trade or that of finance, should also be expanded. These units need to be restructured and equipped with the necessary resources to undertake their task effectively. Cooperation should also be fostered between these units and their European counterparts.
Although trade controls have been relaxed in many African countries, administrative systems and procedures that support FSDSs still lack flexibility. These systems need to be reformed to ensure that operators do not experience unnecessary delays and to generally promote efficient supply and distribution of food to cities.
It would be advantageous for chambers of commerce to include other traders besides importers. Rural wholesalers and collectors, in particular, constitute a dynamic part of the trade sector and can supply substantial information on networks, prices and quantities of local produce. They can therefore play an important role within these bodies and also make critical contributions to the evolution of government policies on food security. To facilitate the integration of rural wholesalers, collectors and other operators, it would be useful to organize them into distinct trade associations under the aegis of a decentralized chamber of commerce with structures to ensure that they are represented in much the same way as importers and manufacturers.
Chambers of commerce should also preserve the autonomy of trader associations and minimize government interference in the business activities of its members. Bearing in mind the economic power they wield, improved coordination among traders and better organization of their activities would enable them to resist political patronage and enhance the independence of their organizations.
The chambers of commerce should organize training programmes in accounting and business management practices for all categories of traders and their employees. The training should also include issues related to applying for bank loans, responding to tender notices and obtaining import licences. This will minimize problems encountered by most traders in having to rely on non-professional parties (relatives, friends and paid or unpaid agents), who may not be competent or trustworthy.
It is important that government officials, especially senior staff, be trained in order to improve their competence and efficiency and also to reduce corruption (there is some indication that the more incompetent staff members tend to be more corrupt).
3.4.1 Loans for infrastructure development
3.4.2 Financing imports
3.4.3 Credit for small-scale operators
The three main categories for which credit is required include infrastructure development, imports and small-scale operators.
Relatively large capital outlays are required for the construction and maintenance of warehouses, the operation of haulage trucks and refrigeration equipment, and the construction or purchase of processing plants and equipment. Most traders lack the required financial resources for such investments and therefore need to have access to suitable credit facilities. Banks require collateral for loans that most traders cannot provide. To encourage lending for these purposes, it would be useful to establish credit guarantee funds (probably from counterpart funds generated from food aid) to secure, at least in part, the loans granted.
The main problems encountered in obtaining bank loans for imports are restrictive lending conditions (ceilings, security in the local currency) and high interest rates (which exceed 40 percent in some countries). Bankers usually justify the restrictive conditions on the basis of high lending risks and inadequate collateral security. One solution to this problem lies in adopting more flexible collateral requirements in Africa to include real estate, livestock and cash crop plantations.
Retailers, collectors and rural wholesalers often face major limitations in obtaining bank loans. Some countries, however, have successfully tried group lending schemes under which a group of traders obtain bank loans backed by joint and several guarantees. Group peer pressure in these schemes encourages relatively higher loan repayment rates. This type of scheme can be improved and extended to cover as many operators as possible.
The coordination of isolated protests by consumers to ensure that their rights are recognized and respected by producers and traders is a function of consumer associations. It is particularly important that consumers be mobilized by effective associations to demand improvement in hygiene standards at markets and also in the quality of produce (including improved packaging, wider variety of produce, better price/quality ratio, display of prices, etc.). The authorities need to encourage and assist the setting up of such associations as well as take note of and investigate complaints made. The associations should also be actively involved in discussions, studies and the coordination of activities regarding all aspects of food supply and distribution networks and chains.
Corruption and malpractice among customs, police and border patrol officials at road checkpoints and international borders should be minimized with the imposition of strict disciplinary codes. More specifically, policing should be entrusted only to regular members of the various police and patrol forces, who can be appropriately sanctioned when there is a breach in their disciplinary code in dealings with traders. Similarly, there should be an effective and sustained effort by the authorities to combat banditry on the highways and rail networks.
Efforts should be made to promote economic integration in various sub-regions of the continent under the auspices of bodies such as the Economic Community of West African States (ECOWAS) and the Central African Customs and Economic Union (CACEU). Customs duties in such sub-regions should be streamlined and free movement of goods, people and capital should be encouraged to promote further development of trade in general and of the food trade in particular.
With regional integration and the associated expansion of markets for local produce, it is expected that gains from scale economies, particularly in terms of the cost transport produce, will enhance efficiency in food trade and lead to lower consumer prices. Furthermore, such improvements can facilitate significant formalization of traditional informal food trading activities.
