# **3.3 Border Frictions Adjusted Routes**

It is difficult to take tariffs and NTMs into account when evaluating transport networks and market access because their effects depend on the value, type, and quantity of products being traded. In addition, AfCFTA has set clear aims to eliminate most inner-African tariffs in the foreseeable future. Regulatory and border frictions on the other hand are more uniformly applicable.

A critical question then is how the estimates from Table 3 can be sensibly added to road distance and travel time estimates. Surely time spent preparing documents or waiting at the border is different from driving time. To better understand the relative cost of these times, I collect data on domestic transport costs from the 2019 DB survey for a sample of 23 (mostly landlocked) African economies where exporting/importing involved domestic transportation of 100km or more. This information is not standardized across countries and thus not published in the DB indicators. For each country surveyed, the distance in km to the border, the time in hours to the border, and the cost in USD of exporting/importing a representative product are recorded.

To estimate the average cost of an hour spent on the road, I regress the cost of the trip on the travel time in hours while controlling for the log of the velocity and a dummy indicating whether the transport was import related.<sup>12</sup> I do the same for the distance traveled. Since I am more interested in converting times into each other rather than converting cost to time, I also regress the cost of border and documentary compliance from Table 3 on the respective time required using data for all 53 available African economies. Table 4 reports the results.

Table 4: Relative Cost of Exporting/Importing Times

|Cost in USD:|Tran|sport|Border|Documentary|
|---|---|---|---|---|
|Model:|(1)|(2)|(3)|(4)|
|Constant|-711.6<sup>_∗∗_</sup>|276.7|217.8<sup>_∗∗∗_</sup>|51.83<sup>_∗_</sup>|
||(285.9)|(317.4)|(65.28)|(29.63)|
|Travel Time (Hours)|15.79<sup>_∗∗∗_</sup><br>(2.074)||||
|Travel Distance (Km)||1.560<sup>_∗∗∗_</sup><br>(0.2987)|||
|Border Time (Hours)|||3.988<sup>_∗∗∗_</sup><br>(0.6781)||
|Documentary Time (Hours)||||1.655<sup>_∗∗∗_</sup><br>(0.3954)|
|Log Velocity (Km/Hour)|346.3<sup>_∗∗∗_</sup><br>(85.84)|-43.95<br>(102.9)|||
|Import Dummy|106.6|107.7|-44.92|78.76<sup>_∗∗∗_</sup>|
||(133.3)|(135.9)|(66.38)|(25.79)|
|Observations|46|46|106|106|
|R<sup>2</sup>|0.448|0.415|0.471|0.388|
|Adjusted R<sup>2</sup>|0.408|0.373|0.461|0.376|

_Heteroskedasticity-robust standard-errors in parentheses. Signif. Codes: ***: 0.01, **: 0.05, *: 0.1_ Evidently, time spent on the road, valued at 15.8 USD per hour in the average African country, is more costly than time spent at the border (4 $ /h) or filing documents (1.7 $ /h). The estimates imply that in the average African country, road time is 15 _._ 79 _/_ 3 _._ 988 = 3 _._ 959 _≈_ 4 times more costly than border time, and 15 _._ 79 _/_ 1 _._ 655 = 9 _._ 540785 _≈_ 10 times more costly than documentary time. To create the NTB-adjusted travel time matrix, I divide border compliance time by 4 and documentary compliance time by 10 before and add them to the OSRM estimates. Using the coefficient on distance indicating an average cost of 1.6 $ /km, I also obtain an adjusted road distance matrix by dividing documentary and border compliance costs by 1.6. These estimates are

> 12I also test the interaction of travel time and the import dummy, but the term is insignificant; thus export and import time do not differ in terms of cost.

11