(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

likely to facilitate deeper integration, involving differentiation and diversification, which can furtherexpand welfare gains.As a small country with limited capacities and resources, Burundi can also benefit significantlyfrom to the development of regional public goods. Several areas of cooperation can make a hugedifference for Burundi, which will increasingly be the case as the regional integration process makesprogress in the coming years:- Regional InfrastructureAccess to regional transport infrastructure networks can reduce transport and trade costs 45 .Economic distances from key global markets (magnified by a range of technical, political and policyrelatedfactors) hinder the movement of goods, people and services. As one of the EAC’s landlockedcountries 46 , which must move goods long distances over land, Burundi is particularly reliant on itsneighbors’ capacity and willingness to supply substantial externalities and public goods in the form ofgood transit policies, regulations, infrastructure and institutional arrangements. Current divisionsassociated with the “thickness” of borders and differences and inefficiencies in institutions, regulations,and currencies pose a major cost on intra-regional trade. For example, it costs US$ 5,000 to transport acontainer from Mombasa to Bujumbura by road, compared to the US$ 1,000 it costs to transport theoriginal container from Japan to Mombasa. These constraints present huge challenges to prevailingeconomic activities. If they can be successfully overcome and effectively managed, great opportunitiesfor growth, in particular for the region’s landlocked countries and for Burundi, can emerge.Access to regional communications infrastructure networks can increase communication trafficand cut bandwidth costs. If communication costs remain high, the price of financing trade andultimately of goods is likely to remain high as well. Broadband networks support regional integration bystimulating cross-border trade and investment among neighboring countries and by strengtheninginstitutional relationships. Burundi is currently involved in the Regional Communications InfrastructureProgram (RCIP) undertaken by the World Bank that aims at promoting regional market integration andsector liberalization, supporting the deployment of regional connectivity and ensuring the viability of theregional communication infrastructure.Developing under-exploited hydropower potential in the region through appropriate regionaltransmission networks and regulation can be key to meeting electricity demand, as well asimproving security of supply, enhancing environmental quality, and ensuring better economicefficiency. Power remains an important infrastructure challenge in the EAC in general, and in Burundi inparticular, where the poor supply, high cost and limited reliability of electricity supply has a significantimpact on the ability of firms to be competitive. Power demand in the East Africa Power Pool (EAPP)area (comprising Burundi, DRC, Egypt, Ethiopia, Burundi, Libya, Rwanda, Sudan and Tanzania) isexpected to increase by 69 percent over the next 10 years. Regional initiatives such as the EAPP, aspecialized institution for electrical power in East Africa adopted at the COMESA level in 2006, canhelp mitigate the constraint of access to energy.- Regional regulations and standardsBurundi can benefit from regional standards and other regional regulatory instruments. Regionalintegration can help Burundi accelerate its on-going reforms in several areas, including theimplementation and harmonization of fiscal instruments, services sector reform, and reform of thebusiness environment on the basis of EAC regulation. In several regulatory areas, such as the mutualrecognition of educational and professional qualifications, intra-African arrangements could be more45 See Chapter 5 on trade facilitation and logistics.46 Uganda, Rwanda, Burundi – and, if successful in its bid to join the EAC, South Sudan45 / 153