Economic Integration in the Lower Congo Region: Opening the Kinshasa- Brazzaville Bottleneck. Africa Trade Policy Notes Note #19

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1 Ecnmic Integratin in the Lwer Cng Regin: Opening the Kinshasa- Brazzaville Bttleneck Africa Trade Plicy Ntes Nte #19 Marius Brülhart and Mmbert Hppe May, 2011 Intrductin: A Majr Bttleneck Kinshasa-Brazzaville, currently the third largest urban agglmeratin in Africa, is predicted t becme Africa s largest, and the wrld s 11th largest, city by With an internatinal brder running right thrugh it, this reginal hub f ecnmic activity is the bvius fcal pint fr crss-brder exchanges between the tw Cngs. Using satellite images f night lights, Figure 1 illustrates hw, in spatial terms, the tw capitals frm a seamless urban unit, which has grwn cnsiderably ver the last tw decades. Accrding t UN statistics, Kinshasa currently cunts 8.8 millin and Brazzaville 1.3 millin inhabitants; up frm 3.6 millin and 0.7 millin, respectively, in The United Natins (2010) expects the Kinshasa ppulatin t grw faster ver the next 15 years than that f any ther wrld metrplis, predicting a 2025 city size f 15.0 millin. The ppulatin f Brazzaville is frecast t swell t 1.9 millin. Despite their size, prximity and status as reginal trade hubs, frmal bilateral trade between the tw cities as well as between their tw cuntries is derisrily small. The prvince f Kinshasa accunts fr ver 21 percent f the Demcratic Republic f Cng s (DRC) GDP but fr a mere 0.8 percent f its exprts. Officially recrded imprts frm the Republic f Cng (RC) represent but a fractin f a percent f Western DRC imprts. Recrded vlumes f transit trade are smewhat larger, but als accunt fr well under ne percent f Western DRC imprts. Recrded RC imprts frm the DRC are nly slightly mre imprtant, amunting t sme 1.12 percent f ttal RC imprts in value terms. There can be n dubt that these statistics largely understate the true vlume f (frmal and infrmal) trade, but they pint tward cnsiderable ptential fr an expansin f frmal trade. 1

2 Figure1: Night Lights in Kinshasa-Brazzaville, 1992 and 2009 Officially recrded trade flws between the DRC and the RC are largely limited t transit trade flws, which seem t be increasing. Recrded transit imprts frm DRC were abut three times larger in 2007 than in the tw preceding years, and transit trade seems t have increased further since. Frmal transit flws predminantly run frm Kinshasa t Brazzaville. Hence, Brazzaville is partially supplied thrugh the DRC s cean prt f Matadi via Kinshasa, due t the pr cnditin f the transprt crridr linking Brazzaville t the RC s cean prt at Pinte Nire. Official data certainly underreprt the imprtance als f transit trade. Large infrmal flws f clthing and textiles frm Brazzaville t Kinshasa, fr instance, mstly riginate in West Africa and reach Brazzaville thrugh Pinte Nire r Duala. These flws d nt appear in any statistics. Passenger traffic between Brazzaville and Kinshasa is smaller in relative terms than traffic between East and West Berlin in the times f the Berlin Wall. We estimate the verall number f passenger crssings at arund 700,000 annually. This vlume f traffic, scaled t city sizes, is sme 175 times smaller than the river-crssing passenger traffic in Kisangani anther cnurbatin straddling the Cng River but nt crssed by a natinal brder. It is als arund five times smaller than the vlume f passenger traffic between East and West Berlin in 1988 well befre the dismantling f the Wall. 1 ESTIMATING THE EFFECTS OF REMOVING THE BOTTLENECK The sheer demgraphic and ecnmic size f the Kinshasa-Brazzaville agglmeratin, as well as its rle as gateway fr large ecnmic hinterlands, shuld make ecnmic 1 In 1988, there were sme 1.9 millin passenger crssings between East and West Berlin abut ne crssing per three inhabitants f the Berlin metrplitan area. The 700,000 estimated crssings between Kinshasa and Brazzaville represent abut ne crssing per 15 inhabitants f the tw cities cmbined. 2

3 integratin between the tw capitals a matter f central plicy interest in the regin. Recent academic research in ecnmic gegraphy furthermre suggests that urbanizatin is a key engine f grwth in develping cuntries, and that cnstraints n the frmatin f urban agglmeratins can cnstitute a severe bstacle t ecnmic develpment f the cncerned cuntries as a whle. 2 Hence, easing the Kinshasa-Brazzaville bttleneck culd yield medium-term grwth effects that extend t the wider ecnmies f bth Cngs. As ur empirical analyses were restricted t ptential shrt-run effects in the Kinshasa-Brazzaville regin itself, ur findings shuld be viewed as lwer-bund estimates f the ptential aggregate effects f trade facilitatin acrss the Cng River. Analysis f Price Differentials We cmpared retail prices in bth cities, as systematic price differences fr identical gds in tw markets represent the prbably mst reliable indicatr f barriers t trade between thse markets. Absent physical and regulatry barriers t trade, price differences will be arbitraged away. We therefre cmpared prices f 57 gds chsen s as t ffer a representative sample f Cnglese cnsumptin baskets. Prices were cllected using a cnsistent methdlgy in fur large retail markets in each city, tw in the respective city center and tw in the suburbs, between 26 August and 3 September We find significant price differences, suggesting that trade facilitatin between Kinshasa and Brazzaville wuld lead t lwer prices in bth cities. Using panel data regressin methds, we find that imprts frm acrss Maleb Pl - the 3.5 kilmeters-wide 2 See, e.g., Deichmann et al. (2008), and Brülhart and Sbergami (2009). stretch f the river Cng that separates the tw cities - are cnsistently mre expensive than crrespnding lcal prducts. Our best estimate f this price differential is 20 percent. Thus, shipping lcal gds acrss Maleb Pl is fund t increase the retail price f these gds by ne fifth. Our ecnmetric analysis furthermre suggests that price differences cannt be attributed t differences in lcal prducer and distributin csts, implying that the underlying ecnmic structures in Kinshasa and Brazzaville are very similar. Cnsiderable price differentials are als fund fr gds imprted frm verseas. Our bserved price differentials imply significant trade barriers between the tw cities but nt within them. Given the prximity f the tw markets, this implies cnsiderable ptential fr intensified arbitrage thrugh crss-pl trade. Structured Interviews In rder t estimate the ptential fr trade expansin, we cnducted a series f structured interviews with firms in Kinshasa and Brazzaville in April-June The interviewed firms had t respnd t a sle criterin: that they were, r had been, engaged in crss-brder ecnmic activities, either by trading gds r by transprting passengers. Cnditinal n this criterin, we sught t cver as representative a sample f firms as pssible. We btained interview answers frm 57 firms, 17 f which are manufacturers, 19 are based in Brazzaville, and 12 are infrmal. Sample firms were presented with an identical 72-item questinnaire, cntaining questins n the existing structure f the business as well as hypthetical assessments f the impact n their activities f trade liberalizing measures. Brazzaville is currently cnsidered a negligible market fr mst firms in Kinshasa, but respnses pint twards large untapped trade ptential. Of the 38 Kinshasa-based 3

4 firms, nly 17 declared significant sales in Brazzaville. The average share f such sales is estimated at arund 5 percent. Given that the ppulatin f Brazzaville crrespnds t sme 15 percent f the ppulatin f Kinshasa, and that average incme is higher in Brazzaville, this implies large unexplited trade ptential between the tw cities. As a result f excessive administrative csts, mst crss-river trade is partly r fully infrmal. Only tw f the 17 Kinshasa firms wh have significant client bases in Brazzaville exprt thrugh fficial channels. The remaining 15 firms get their clients t ship the gds acrss Maleb Pl themselves. Six Kinshasa-based firms declared that they had either exprted frmally t Brazzaville in the past r seriusly cnsidered ding s, but abandned all such activity, citing excessive administrative csts including duties, paperwrk and bribes. Infrmally traded gds are smuggled acrss the river via well established systems invlving under-the-cunter payments t varius custms and security fficials. Trade facilitatin acrss Maleb Pl appears t hld particular prmise fr prmting lcal manufacturing and smallscale trading activity, much f which is currently infrmal. Regressin analysis f the survey respnses suggests that smaller firms and manufacturing firms anticipate expanding their activities prprtinally mre than larger firms and pure trading cmpanies, perhaps because larger firms and pure traders are already better able t circumvent trade barriers. The estimated trade-cst elasticity f trade between Kinshasa and Brazzaville is 0.8. A halving f trade csts is predicted by ur sample firms t trigger a 40-percent increase in the vlume f trade. The crrespnding estimated elasticity fr ttal external trade by DRC and RC firms equals 0.5. Hence, a reductin in trade barriers between the tw capital cities wuld trigger a cnsiderably strnger relative increase in trade flws than trade liberalizatin measures aimed at ther partner cuntries and trade rutes. As ur apprach implies a certain status-qu bias and must therefre be cnsidered as yielding lwer-bund estimates, ur estimated elasticities may well be cmpatible with true elasticities f ne, meaning that any cut in trade csts might be ffset by a fully equiprprtinal increase in the vlume f trade. BARRIERS TO CROSS-BORDER INTEGRATION We estimate the average cst f a return trip acrss Maleb Pl at sme USD 40, equivalent t between 40 and 80 percent f the average mnthly incme earned by Kinshasa residents. All interviewed firms cmplained abut excessive fares and taxes fr crssing Maleb Pl. Accunting fr the full range f fees, the cst f a return trip n an fficial ferry is estimated at USD (see Table 1). Hwever, effective csts stated by interviewees vary widely, due largely t unpredictable and arbitrarily applied schedules, t a multitude f fee-charging services with incnsistent presence and enfrcement, and t widespread evasin and crruptin. 20,000 CFA francs (~USD 40) is the standard all-inclusive price stated t us by several regular travelers. Crssing by pirgue represents a slwer and mre hazardus alternative, which, accrding t the csts summarized in Table 1, still csts abut half f a ferry crssing, mainly because f payments claimed by plice and military fficers. T put these figures in perspective: San Francisc and Oakland are separated by a similar distance t that between Kinshasa and Brazzaville. If, relative t lcal average incme, the same csts applied t crssing the Bay Bridge as thse that currently have t be paid t crss Maleb Pl, San Francisc residents wuld pay between 1,200 and 2,400 dllars fr a return trip t Oakland. 4

5 Table 1: Estimated Cst f Passenger Crssing between Kinshasa and Brazzaville (in USD) Table 1: Estimated Cst f Passenger Crssing between Kinshasa and Brazzaville (in USD) Frm Kinshasa t Brazzaville Ferry Fast bat ("cant") Dugut cane Frm Brazzaville t Kinshasa Ferry Fast bat ("cant") Dugut cane One-way fare Travel dcument ( laissez-passer ) at rigin Search ( jetn fuille ) at rigin Prt fee ( redevance prtuaire ) at rigin Vaccinatin card at rigin 1.60 Varius fees and taxes at destinatin Plice/military at rigin ( drit de passage, cmmisse etc.) Plice/military at destinatin ( drit de passage, cmmisse etc.) Ttal Surce: cnfidential survey f 57 trading firms in Kinshasa and Brazzaville. Prices cnverted using exchange rates f 910 Cnglese francs per USD and 510 CFA francs per USD In additin, traders are frustrated by tight timetables and pr rganizatin f the ferry prts. Officially, passenger traffic is allwed nly between 8 a.m. and 4 p.m. n weekdays and Saturdays and between 8 a.m. and 12 p.m. n Sundays. Custms clearance f gds is dne in pen spaces and is badly rganized. Traders and simple travelers are nt systematically treated separately, which cmplicates custms prcedures and increases pprtunities fr rent extractin by fficials, wh are ften described nt nly as crrupt but as aggressive and dwnright vilent. Discriminatin by natinality and ethnicity is als reprted. The intensity f fficial harassment ( tracasseries ) als seems t vary acrss different types f merchandise, with sme gds, such as sugar, less subject t extrtinary pressures than thers. Shipping gds acrss Maleb Pl in bulk is very cstly as well. Csts reprted by traders range frm 3 t 30 percent f FOB values. Recent Wrld Bank estimates are f USD 15 per tn fr barge transprt and USD 26 fr brder delay csts. While prt infrastructure is in a general state f disrepair, administrative hurdles appear t represent the main cst factr. Transit prcedures als generate cnsiderable 5

6 Bx 1: ONATRA and CNTF Despite its dminant psitin, ONATRA claims nt t be able t finance any investment prjects ut f its river-crssing peratins. It can be estimated that ONATRA s daily perating prfit frm the Maleb- Pl ferry service alne exceeds USD 5,000, thus prbably earning the firm sme 2 millin dllars annually. The prt at Matadi, which is als run by ONATRA, is believed t generate even larger perating margins. The prblem, accrding t the firm s management, is a tp-heavy and blated payrll f sme 12,500 emplyees plus a similar number f pensiners fr all f its peratins. Sme f this is undubtedly a legacy f busier pre-war times, but it des nt appear that the firm has prper cntrl ver its entire payrll. What is clear, hwever, is that this verblwn persnnel budget as well as varius frms f gvernment interference prevent ONATRA nt nly frm ffering the best custmer service (an unlikely utcme anyway, given its mnply status) but even frm maximizing its wn prfits. It wuld appear very likely that investing sme f its revenues in upgrading its transprt and lading capacity wuld benefit its wn prfits in the medium term, as the firm seems t perate well belw the capacity at which its marginal cst equals its marginal revenue. The situatin at ONATRA s Brazzaville-based equivalent CNTF seems t be very similar. Despite high perating margins, the firm s management claims that n re-investable prfits can be generated. Discussins are said t be under way fr the privatizatin f CNTF, but real prgress des nt lk imminent. administrative csts, and the system allws substantial leakage. Custms prcedures at Kinshasa and Brazzaville brder psts are reprted t be cumbersme. There is n effective preferential trade agreement between the tw Cngs even thugh bth are members f the Ecnmic Cmmunity f Central African States (ECCAS). This means that in principle all gds transprted acrss the river have t pay the full custms duties. While a simplified regime fr small-scale traders existed in the past, this regime has been suspended, and treatment f petty traders remains arbitrary and ften abusive. A DRC presidential decree f 2002 grants the right t perate at custms psts t nly fur agencies. Yet, up t 17 agencies are reprted t perate at the passenger prt in Kinshasa, ften raising fees frm traders and travelers withut ffering any crrespnding services. The bserved high prices and lw capacity largely result frm the duply granted t the tw natinal peratrs, ONATRA (in the DRC) and CNTF (in the RC). A cnventin signed by the tw gvernments in 2005 attributes exclusive rights ver the Brazzaville- Kinshasa rute fr passenger traffic t the tw state-wned transprt cmpanies. Yet, despite their fficially sanctined privileges, the tw peratrs appear t be unable t finance maintenance and infrastructure investment ut f their revenues frm river-crssing traffic (see Bx 1). The main reasn behind high prices and inadequate infrastructure therefre appears t lie 6

7 Bx 2: Crssing the Cng at Kisangani Mre than 96 percent f crssings are made by mtrized dugut cane, with less than 4 percent f passengers crssing by ferry. In Nvember 2010, sme 60 canes were in peratin n any single day. Duguts depart n average every ten minutes, between 5.45 a.m. and 10 p.m. Passengers pay CDF 100 fr a crssing n the ferry as well, whereas vehicles are charged USD 30 fr a same-day return. Sme 3,000 vehicle return trips are recrded per annum. The ferry perates frm 7 a.m. until 6 p.m. Even thugh river-crssing traffic is significantly cheaper, mre frequent and less cumbersme in Kisangani than in Kinshasa-Brazzaville, the river-crssing transprt market in Kisangani is nt free either. Bth prices and quantities are cntrlled. Fares are set by the mayr s ffice ( Hôtel de Ville ) and the Natinal Ecnmics Ministry ( Ministère de l Écnmie Natinale ). Entry is cstly: every cane peratr has t be affiliated with ANAFLUKIS, the assciatin f private peratrs. This csts a hefty USD 500 t jin, plus a daily fee f CDF 2,600. Furthermre, ANAFLUKIS restrains the number f peratrs at any given time, by frcing canes t wrk nly every secnd day. This arrangement is clearly lucrative fr peratrs. It can be estimated that daily perating prfits per cane (after fuel csts and fees) are in excess f USD 25. Furthermre, ANAFLUKIS evidently makes significant revenues, the destinatin f which we were nt able t establish. Finally, ANAFLUKIS are frced by the mayr s ffice t buy mst f their fuel at abve-market prices. This is anther surce f ecnmic rents whse final beneficiaries are unknwn t us. The ferry peratr seems t earn cnsiderable prfits but fails t invest in maintenance and repairs with likely very high return n investment. Our estimates suggest that the ferries generate an annual perating prfit smewhere between USD 120,000 and 390,000. Nnetheless, the peratr Office des Rutes claims t lack the means fr financing maintenance, let alne investment. In fact, the car ferry, which was dnated by the EU in 2008, has been brken since June Since then, it crsses the river twed t the passenger ferry, which significantly reduces carrying capacity. The cst f repairing the brken engine is estimated at less than USD 20,000. Yet, based n reprted revenues when the ferry was peratinal, we estimate that such an investment wuld allw the peratr t mre than duble its revenues. We were unable t establish what happens with Office des Rutes prfits frm the ferry peratin in uncmpetitive market structure cupled with pr management by the dminant peratrs. Crss-river passenger traffic in Kisangani is 175 times larger in per capita terms than in Kinshasa-Brazzaville. Being lcated n either side f the Cng river but nt divided by a natinal brder, Kisangani ffers a useful pint f cmparisn t Maleb Pl. Kisangani has an estimated ppulatin f smewhat ver 800,000, making it arund a twelfth the size f Kinshasa- Brazzaville. In Kisangani, it is cmmn fr traders, schl children, students and wrkers cmmute acrss the river n a daily basis - smething which has been unheard f between Kinshasa and Brazzaville fr decades. The estimated number f passenger river crssings fr 2009 is 10.2 millin, while ur estimate f the number f trips acrss Maleb Pl is 0.7 millin. Crssing the river Cng in Kisangani is abut 300 times less expensive than crssing it in Kinshasa-Brazzaville, and the river in 7

8 Kisangani is pen fr legal crssing twice as lng every day as n Maleb Pl. All fficial peratrs in Kisangani apply a flat fare f CDF 100 (USD 0.1) per persn and crssing. N additinal charges apply, and bureaucratic bstacles seem t be minimal bth at embarkatin and at disembarkatin. Yet, the river is nly abut six times wider in Kinshasa than in Kisangani. While disabled travelers, wh generally pay n r reduced fares and duties between Kinshasa and Brazzaville, accunt fr tw thirds f passengers in Kinshasa-Brazzaville accrding t sme estimates, their share in Kisangani is estimated at just ten percent. This is an evident utcme f river crssings being significantly mre affrdable t the general ppulatin in Kisangani than n Maleb Pl. Fr details n the rganizatin f river-crssing traffic in Kisangani, see Bx 2. POLICY RECOMMENDATIONS What can plicy makers d? While large freign-funded infrastructure prjects exist n the drawing bard, cnsiderable uncertainty remains ver their realizatin and future viability. Hence, we explre ptins fr regulatry measures and small-scale dnr interventins aimed at unleashing bttm-up lcal entrepreneurial activity. First and fremst, ur analysis pints t the imprtance f custms refrm. A central element f such a refrm is the systematic implementatin f single clearing and payment pints fr traders ( guichet unique ). A crllary f this is a significant reductin, in the number f public r semi-public agencies (r even private agents) active at brder psts and allwed (r at least tlerated) t cllect fees frm traders. Existing law in fact nly allws fur such agencies t perate at the brder. An area fr refrm f particular interest t the Kinshasa-Brazzaville regin, as well as t their hinterlands, is the rganizatin f transit trade. Leakage and fraud in transit trade shuld be minimized. Transit culd be further facilitated by mre intensive cllabratin between DRC and RC custms ffices, and the mdalities f charging (and reimbursing) indirect taxes shuld be imprved. In additin, travel and transprt acrss Maleb Pl culd be facilitated thrugh a range f mainly regulatry measures, with immediate impact. Given the large cst and uncertain prspects assciated with the lngstanding prject f building a bridge acrss Maleb Pl, less cstly and mre rapidly implementable slutins t unblcking the Kinshasa-Brazzaville bttleneck need t be identified. Such measures culd prepare the grund fr later infrastructure investment, by demnstrating the effects f lwer trade csts. While dilapidated infrastructure may be the visible face f high trade csts in Africa, uncmpetitive transprt markets ften pse even mre severe bstacles t the free mvement f gds and peple. 3 High administrative csts and cnstraints n cmpetitin in transprt services wuld have t be addressed t allw the full benefits f imprved infrastructure t materialize. If implemented effectively, such measures by themselves culd generate benefits similar t thse f a bridge, at a fractin f the cst. In fact, facilitating the activities f lcal transprt entrepreneurs acrss Maleb Pl culd well pay higher ecnmic rewards than the cnstructin f a bridge, since mst f the wrk n a bridge wuld likely have t be carried ut by freign cntractrs, whereas water-brne transprt services can well be supplied by lcal peratrs. Part f such a refrm culd als be the reintrductin f a transparent system fr clearing custms t small traders as utlined belw. 3 See Teravaninthrn and Raballand (2009). 8

9 T this end, the first-best plicy ptin wuld be t ablish the cnventin restricting passenger traffic acrss Maleb Pl, thus ending the stranglehld f ONATRA and CNTF n Pl-crssing passenger transprt. Ideally, market liberalizatin wuld be accmpanied by mre transparent and simpler prcedures fr immigratin, custms, and related brder cntrls. Transprt f gds and passengers wuld be mre clearly separated in rder t reduce pprtunities fr rent extractin. Cncessins fr additinal river prts t cmpete with the existing set f prts culd be auctined as a cmplement t these refrms. As a secnd-best slutin, the establishment f a secnd pair f accessibly lcated beaches with independent transprt peratrs culd g a lng way tward reducing transprt prices and limiting pprtunities fr rent extractin by prt agents and shipping peratrs. If such slutins were nt plitically feasible, initial measures t facilitate trade and passenger traffic culd fcus n a range f relatively simple administrative measures: enfrcement f full transparency f fares fr passengers and gds thrugh publicly available fare schedules enfrcement f full transparency f all brder and harbr fees and duties thrugh publicly available schedules f the full range brder taxes re-intrductin f simplified custms duties fr small transactins cnducting a pilt trial f a single-fee mdel fr passengers and/r gds (all brder fees and duties cnslidated int a single rate, cllected at ne cunter, and then shared ut amng the relevant gvernment agencies) a clearer separatin f passenger and gds traffic at existing prt facilities a reductin in custms cntrls n pure passenger traffic t infrequent randm checks (made pssible by the separatin f passengers frm gds traffic) enfrcement f limitatins t agencies allwed t perate at brder pints extensin f prt pening hurs and hurs fr river crssings The payff t administrative and regulatry refrms culd be leveraged thrugh infrastructure investments. Private as well as scial rates f return n transprt investments are estimated t be particularly high between Kinshasa and Brazzaville, where ppulatin density is high and distances are cmparatively shrt. 4 Access rutes als ffer significant ptential. The Matadi-Kinshasa and Pinte Nire-Brazzaville crridrs serve nt nly as the respective gateways t the wrld fr the tw capital cities but they shuld be seen as cmpeting crridrs that can ensure substantial reductins in trade csts. Lwer access csts t wrld markets fr lcal cmpanies will increase their capacity t cmpete and create additinal emplyment. In additin, the tw crridrs culd functin as mutual fall-back ptins fr the case f interruptins t ne f thse rutes. Hence, each cuntry s maintenance f its access rute t the cean generates external benefits t the ther cuntry. Infrastructure investments will have t be cmbined with sustainable mechanisms fr maintenance. The upkeep f new and existing physical capital will have t be lcally funded t be sustainable in the lng term. It is therefre imprtant that prjects t facilitate trade are made cmpatible with the incentives f lcal actrs t serve the interests f the many rather than thse f the few. As lng as freignfinanced transprt capital is captured fr rent extractin by lcal elites while being left t degrade, such investments will nt yield sustainable gains - and they may even add t lcal distributive tensins. 4 See Wrld Bank (2010). 9

10 Unblcking the Maleb bttleneck thrugh a cmbinatin f regulatry changes and sme infrastructure investment culd yield significant ecnmic gains fr bth capital cities, have symblic value as a gesture f plitical gd will, and represent a test case fr trade refrm. Since many reginal integratin treaties have remained a dead letter and may be seen as plitical vanity prjects by much f the ppulatin, sme well-targeted interventins in Kinshasa and Brazzaville culd ffer visible advantages t a large number f citizens at relatively lw cst. Implementatin and enfrcement may als be mre effective right in the heart f the capital cities, where the central gvernment has better cntrl than in mre remte brder regins. Kinshasa and Brazzaville, therefre, are ideally placed t be taken as a test case fr refrm f crss-brder transprt and custms, which, if successful, culd later be replicated elsewhere. References Brülhart, Marius and Federica Sbergami (2009) Agglmeratin and Grwth: Crss-Cuntry Evidence. Jurnal f Urban Ecnmics, 65(1): Deichmann, Uwe; Smik V. Lall; Stephen J. Redding and Anthny J. Venables (2008) Industrial Lcatin in Develping Cuntries. Wrld Bank Research Observer, 23(2): Teravaninthrn, Supee and Gaël Raballand (2009) Transprt Prices and Csts in Africa, Wrld Bank. United Natins (2010) Wrld Urbanizatin Prspects: The 2009 Revisin. New Yrk: UN Secretariat. Wrld Bank (2010) Demcratic Republic f Cng: Priritizing Infrastructure Investments A Spatial Apprach. Abut the Authrs Mmbert Hppe is a cnsultant in the Africa Pverty Reductin and Ecnmic Management unit. Marius Brülhart is Prfessr f Ecnmics at the University f Lausanne (Switzerland) and a Cnsultant in the Pverty Reductin and Ecnmic Management unit. This wrk is funded by the Multi-Dnr Trust Fund fr Trade and Develpment supprted by the gvernments f the United Kingdm, Finland, Sweden and Nrway. The views expressed in this paper reflect slely thse f the authrs and nt necessarily the views f the funders, the Wrld Bank Grup r its Executive Directrs. 10