The Significance of Transport Costs in Africa

H transport costs pose a significant barrier to development in africa. Causing friction in the movement of labour and goods, transport costs effectively reduce the markets for labour and goods, and for the transmission of knowledge and technologies. Reducing transport costs in contemporary Africa has become even more of a priority, with many countries having reduced tariffs on their international trade, and as protectionism in developed countries are scaled down. The success of Africa’s exports, as well as its rural and more generally its spatial development, now depend on lowering its transport costs. This Policy Brief addresses a number of pertinent questions on transport costs in Africa, such as ‘what are transport costs?’, ‘do transport costs matter for trade?’, ‘how important are transport costs in practice?’, and ‘why are Africa’s transport costs so high?’. We present a case study of the firm location decisions of exporters in South Africa to illustrate the significance in particular of domestic transport costs for international trade. We conclude by discussing various policy options that can be taken to reduce transport costs in Africa.