Freight Transport Market Analysis and Political Economy Analysis - Benin and Niger
16 September 2020
21 October 2020
MCC - Millennium Challenge Corporation
Benin, Niger, United States of America
Benin & Niger Regional Integration Transport Program Background
MCC's potential Benin & Niger Regional Integration Transport Program involves rehabilitating portions of the existing transport corridor between Cotonou in Benin and Niamey in Niger, while addressing some of the institutional and market constraints that raise the financial and time costs of transporting goods along this corridor. This corridor is considered one of the most heavily traveled north-south corridors in West Africa, at up to 5,000 vehicles per day, with a high percentage of trucks. The Benin-Niger border crossing is perhaps the busiest crossing between any coastal and land-locked country in the region, with an average of approximately 1,000 vehicles per day.
Important market and institutional constraints along this corridor include uncompetitive and extractive freight allocation arrangements; inefficient trucking industries; dysfunctional border crossings and customs processing; weak maintenance regimes, especially in Benin; and weak application of regional axel load limit regulations. A concurrent regional program involving this transport corridor would therefore need to be accompanied, and perhaps preceded, by reforms to address one or more of these constraints. While fully understanding these issues will be time consuming and addressing them challenging, the pay-off to unlocking them could be quite high.
Objectives of the Freight Transport Market Analysis and Political Economy Analysis for the Cotonou-Niamey Corridor
The objective of these analyses is to develop and refine an understanding of the causes or influences underlying the following obstacles to economic growth and poverty reduction through regional integration:
Both the competitiveness of Benin and Niger's exports and the purchasing power of their consumers are highly dependent on efficient importation of production inputs and consumer goods. High freight prices and inventory expenses raise the cost of these inputs and consumer goods, reducing returns on private investment and lowering consumer purchasing power. High shipment duration raises the working capital tied up in inventory in transit, while variable duration requires either uncertainty coping expenses (such as purchase and storage of excess inventory) or interruption of production activities dependent on inputs whose shipment is delayed. The third obstacle, rapid road deterioration, contributes to high freight transport costs (separate and distinct from high freight prices), while potentially diverting scarce government and donor funds from other critical investments. Related policy and institutional reform (PIR) issues along the portion of the corridor in Benin appear to have substantially shifted following the start of the Talon administration in April 2016, necessitating a current assessment of the magnitude and root causes of these obstacles that
Our central concern is the potential for transport market structures and political economy factors to undermine the objectives of the project, which may include reducing freight transport prices, freight transport duration and variability in duration, and road deterioration rates. MCC requires that the objective of each project satisfy the following conditions: (i) can be measured cost-effectively through an independent evaluation; (ii) is clearly specified, such that there is no ambiguity about what would be measured or how to interpret results (e.g. has a quantitative target that is derived from a documented baseline); (iii) is achievable within a reasonable period of time usually no more than five years following completion of the compact; (iv) is clearly linked to the benefit streams modeled in the cost-benefit analysis and summarized in the economic rate of return (ERR) estimate; and (v) based on available evidence and literature, can be directly attributed to the proposed set of investments to be funded via the project.
The three key sub-questions are:
1) How and to what extent does the freight transport market structure drive up freight prices and could continue to do so despite potential MCC investment in rehabilitating road infrastructure
2) What is the allocation of profit across the freight transport sector value chain actors, with particular attention to middlemen;
3) To what extent does the market structure create uncertainty (or, conversely, transparency) for transporters, and how does that uncertainty (or transparency) affect transporter decision-making?
Period of Performance
The overall anticipated period of performance of this contract is as follows:
Date of Award through 12 months thereafter (est. 12/18/2020 12/17/2021)
Note: While the intention is to complete this work within six (6) months, the period of performance for the contract will be set at 12 months from the date of award to account for potential fieldwork delays due to COVID-19.
Place of Performance
Work will take place at the Contractor's offices, with field work in Benin and Niger, and presentations at MCC headquarters in Washington DC or via video conference as necessary
Hyperlinks to Related Project Dossiers:
'https://beta.sam.gov/api/prod/opps/v3/opportunities/resources/files/518c0b9a285b4428b32e2bfb34d922b5/download?api_key=null&token=' RFQ No. 95332420Q0067 - Freight Transport Market Analysis and Political Economy Analysis - Benin and Niger
'https://beta.sam.gov/api/prod/opps/v3/opportunities/resources/files/41ed9881c71d4bee92758df1fb895974/download?api_key=null&token=' Attachment J.2. - Past Performance Questionnaire
'https://beta.sam.gov/api/prod/opps/v3/opportunities/resources/files/76fe80034625434d97a5e6ef9afbfe08/download?api_key=null&token=' Attachment J.1 – What is Political Economy Analysis and Why is it Important