Category / Africa

by Mike Poverello

Can reducing Non-Tariff Trade Costs in Africa be the gamechanger for the African Continental Free Trade Area

The following is a blog article by Taku Fundira, published via Tralac dated 28 March 2023.

The African Continental Free Trade Area (AfCFTA) which is set to be the largest free trade area (FTA) in the world with 54 of the 55 members of the Africa Union being signatories to the Agreement. The AfCFTA if fully implemented, is expected to provide a major opportunity for African countries to attract Foreign Direct Investment (FDI), diversify exports, boost intra-African trade, boost growth, reduce poverty, foster economic inclusion, and promote sustainable economic development.

Currently, countries are not trading under the AfCFTA trading regime, however, Phases I and Phase II negotiations have been completed albeit tariff concessions and rules of origin (RoO) negotiations for some products are still underway. These two issues, partly attribute to the reasons why it is not yet possible to trade under the AfCFTA. Phase III negotiations are currently underway and include protocols on additional topics such e-commerce. Trade and Women and Youth in Trade Protocol which was added to the AfCFTA agenda has since been concluded is expected to be approved later in 2023.

The Guided Trade Initiative

Despite countries, not yet trading fully under the AfCFTA, a pilot initiative called; the Guided Trade Initiative (GTI) which aims to stress test trading in goods between member countries within the operational, institutional, legal and trade policy environment under the AfCFTA was launched in Accra on 7th October 2022. Eight countries are participating in this pilot. Tanzania following Rwanda, Kenya, and Ghana, have begun trading under the GTI. The AfCFTA GTI has identified 96 products, including tea, coffee, processed meat products, sugar, and dried fruits, to be traded among the participating countries. Tanzania aims to sell 10 products under the AfCFTA’s GTI including coffee and glassware. Plans are underway to have a similar GTI for services subject to State Parties agreeing on modalities.

Initial assessment of the GTI reveals that there remain significant challenges for African countries to trade smoothly and boost intra-African trade mainly because non-tariff barriers (NTBs) to trade remain prevalent, massive infrastructure gaps especially transport infrastructure pose a threat to the success of not only the GTI but also to the AfCFTA. For Africa to make the most of free trade, the continent must address these challenges. Estimates suggest most African landlocked countries face high transport prices which are three to four times more than in most developed countries. Several institutional, political and other factors that combine to limit competition, encourage corruption, discourage investment and encourage informal activity attribute to the prevalent high prices in Africa.

Non-tariff trade costs extremely high

Latest available data from the World Bank on non-tariff trade costs (NTTCs) reveal that on average goods traded between African states accrue 292% ad valorem equivalent (AVE) in NTTCs. Non-tariff trade costs include among others, transport costs; direct and indirect costs associated with differences in languages and currencies, cumbersome import, and export procedures. Despite commitments by regional economic communities (RECs) to reduce NTTCs through mechanisms such as the NTB online monitoring mechanism under the Tripartite FTA and under the AfCFTA demonstrate the importance of ensuring that NTBs do not impede intra-Africa trade, reducing NTTCs.

Tralac has produced an infographic on intra-Africa NTTCs using the ESCAP – World Bank Trade Cost Database which can be found on the tralac website and it reveals the following:

  1. Over a 10-year period (2011 – 2020) there have been no significant changes in non-tariff trade costs (NTTC). NTTCs decline by 2% CAGR (compound annual growth rate) over the review period (2011-2020).
  2. Agricultural products’ NTTC remain much higher than manufacturing products’ NTTCs over the review period (2011-2020), although declining relatively much faster over the last 5 years relative to manufacturing products’ NTTCs. Between 2016 and 2020, agricultural and manufacturing NTTCs declined by 2.5% (CAGR) and 1.4% (CAGR) respectively.
  3. The average intra-Africa NTTC on agriculture and manufacturing in 2020 (latest available data) is 330% (AVE) and 253% (AVE).
  4. Intra-REC NTTCs are lower than between RECs (inter-REC)
  5. COMESA has the highest average intra-REC NTTCs (285% AVE) and EAC has the lowest (135% AVE)
  6. ECOWAS has the highest average inter-REC NTTCs (347% AVE) and EAC has the lowest (269% AVE)
  7. ECOWAS – EAC inter-REC average NTTCs are the highest at 416% (AVE) followed by ECOWAS – COMESA at 389% (AVE)
  8. SADC and COMESA’s inter-REC average non-tariff trade costs are more or less the same at 300% (AVE) and 306% (AVE) respectively

Based on these findings it is not surprising why intra-Africa trade has remained low averaging 18% of Africa’s global trade over the past decade. Intra-Africa trade remains regional and limited to neighbouring countries partly due to these NTTCs which if left unchecked will hamper the goals of the AfCFTA. Therefore, their reduction can be a gamechanger for the AfCFTA and more specifically for African economic development.

Trade facilitation key to reducing NTTCs

The extent to which the AfCFTA will be effective to reduce trade costs depends importantly on governments addressing NTBs, including in services markets. Trade facilitation becomes key to the success of reducing NTTCs, by improving trade and customs procedures as well as facilitating the relationship between businesses and government agencies at the border to reduce costs, while protecting the intended regulatory objectives. Estimates from the UNECA (United Nations Economic for Africa) project that intra-Africa trade could double through enhanced trade facilitation and the reduction of NTBs in the AfCFTA.

The AfCFTA Agreement provides a legal framework with specific undertakings for trade facilitation and the elimination of barriers contained in Annex 3 on Customs Co-operation and Mutual Administrative Assistance; Annex 4 on Trade Facilitation; and Annex 8 on Transit. Annex 3 deals with trade facilitation in customs administration. Within RECs efforts to reduce NTBs have yielded significant progress (e.g., Tripartite FTA NTBs monitoring mechanism), however more needs to be done on trade facilitation as little progress has been made here.

What needs to be done?

A limited number of Strategic Corridors has been identified considering their potentialities to facilitate sustainable, efficient, smart, resilient, fair, affordable, secure, and safe mobility and trade within Africa.

State parties should be serious about implementing their trade facilitation obligations or fulfilling their duties under the AfCFTA Agreement and therefore legally binding and justiciable mechanisms should be put in place to ensure transparency, certainty and predictability. These must be complemented by regional and national instruments and measures. In effect Member States should implement their binding obligations. State parties’ customs authorities/agencies should be capacitated and coordinated. This would go a long way in improving trade facilitation governance in Africa and leveraging AfCFTA benefits.

Financing the AfCFTA and associated trade facilitation measures will go a long way in ensuring the success of regional integration in Africa. Furthermore, transport infrastructure should be prioritised. It is important to note that projects are already in progress to boost the development of continent-wide infrastructure. For example, Tanzania’s construction of the Standard Gauge Railway Project is expected to provide a safe and reliable means for efficiently transporting people and cargo to and from the existing Dar-es-Salaam port. Other large projects underway include the Trans-Maghreb Highway in North Africa, North-South Multimodal Corridor, the Central Corridor project, and the Abidjan-Lagos Corridor Highway project.

In conclusion, reducing the NTTCs will be a gamechanger for the AfCFTA. What’s needed is for Member States to rise to the occasion by concluding the outstanding negotiations, especially resolving teething issues with respect to specific products especially outstanding RoO issues and finalising tariff concessions. Furthermore, the political, social, and economic environment should be managed both at the regional and national levels with the ultimate goal of ensuring the success of the AfCFTA.

Read the Full Article, with annotations here!

Source: Tralac

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by Mike Poverello

Vietnam seizes 600 kg of ivory smuggled from Africa

Vietnamese authorities have over the past week seized more than 600kg of ivory smuggled from Africa, the government said on Monday, 6 February 2023.

Trade in ivory is illegal in Vietnam but wildlife trafficking remains widespread. Other items often found smuggled into the country include pangolin scales, rhino horns and tiger carcasses.

Customs authorities in the northern port city of Haiphong on Monday found nearly 130kg of ivory hidden in a container of cow horns originated from Africa, the government said in a statement.

This followed the finding of nearly 500kg of African ivory on Thursday last week at Lach Huyen Port in the city, the government said.

This has been the largest seizure of smuggled ivory in the country in more than four years. The authorities had in October 2018 seized more than eight tonnes of ivory and pangolin scales in one of the country’s largest wildlife trafficking cases for years.

Source: Asian.com

by Mike Poverello

AfCFTA Rules of Origin – Quick Guide for the Private Sector

The World Customs Organization with the support of the European Union under the EU-WCO Rules of Origin Africa Programme has developed a quick guide to the private sector to assist with the practical implementation of the African Continental Free Trade Area (AfCFTA) Agreement Annex 2 on Rules of Origin of the Protocol on Trade and its relevant appendices.

The main objectives of the AfCFTA Agreement are to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of a Customs Union in the future.

The guide is available in English, French, Portuguese and Arabic.

Source: WCO

by Mike Poverello

A Snapshot of Wealth in Africa

The continent of Africa contains more than 50 countries, but just five account for more than half of total wealth on the continent: South Africa, Egypt, Nigeria, Morocco, and Kenya.

Despite recent setbacks in Africa’s largest economies, wealth creation has been strong in a number of areas, and total private wealth is now estimated to be US$2.1 trillion. There also an estimated 21 billionaires in Africa today.

Drawing from the latest Africa Wealth Report, here’s a look at where all that wealth is concentrated around the continent.

South Africa is a still a major stronghold of wealth in Africa, with a robust luxury real estate market and ample wealth management services. The country is also ranked second on the continent in per capita wealth. That said, the country has faced challenges in recent years.

An estimated 4,500 high net worth individuals (wealth of US$1 million or more) have left South Africa over the past decade, migrating to places like the UK, Australia, and the United States. In one stark data point, the report points out that “there are 15 South African born billionaires in the world, but only 5 of them still live in South Africa.”

Read the full article

by Mike Poverello

AfCFTA – Why regional support is crucial for effective implementation

Wamkele Mene, Secretary-General of the AfCFTA Secretariat

In order to support the implementation processes of the African Continental Free Trade Area agreement, Regional Economic Communities (RECs) need to make informed choices about how to reap the benefits presented by the agreement, while at the same time managing the challenges that may be encountered in the course of the implementation. 

Wamkele Mene, Secretary-General of the AfCFTA Secretariat, stressed this Tuesday, June 7, on the occasion of the second coordination meeting of the CEOs of RECs, on the implementation of the AfCFTA held at the EAC Headquarters, in Arusha, Tanzania.

The meeting sought to take stock of the progress made since the last meeting in Accra in 2021.

The role of the continent’s eight RECs is critical especially as the latter are building blocks for the AfCFTA.

Mene said the implementation of the AfCFTA will likely influence future trade policies of the RECs. 

“In this regard, effective collaboration between the RECs and the AfCFTA Secretariat is necessary to ensure that the AfCFTA outcomes are consistent with regional advancements in trade integration made thus far and the projections for the future,” Mene said.

“Therefore, the coordination meetings offer us an opportunity to listen to one another, to better understand our areas of difference, and to work together to build consensus around common positions critical to our success at creating an African Economic Community.”

African leaders mandated the AfCFTA Secretariat, the African Union Commission, and the RECs to develop a framework of collaboration to enhance complementarity, synergies, and alignment of programmes and activities to facilitate the effective implementation of the AfCFTA. The negotiation of the AfCFTA is now in phase two which covers investments, intellectual property rights, women and youth in Trade competition policy and digital trade. 

It is Mene’s strong conviction that by agreeing on a workable framework which will strengthen the interdependence of RECs on the one hand, and strengthen the cooperation between RECs and the AfCFTA Secretariat on the other hand, “we will be taking steps critical to the success of the AfCFTA.”

“We have already received instructions from the Assembly of Heads of State and Government of the African Union to take all necessary steps to ensure the effective implementation of the AfCFTA, including facilitating commercially meaningful flow of goods and services under the AfCFTA preferential regime, across the continent. We were also instructed to develop a coordinated approach to the implementation of the AfCFTA Agreement, with the existing RECs as building blocks.”

Peter Mathuki, the EAC Secretary-General, noted that Africa is one of the world’s fastest-growing economies, but trade in goods and services accounts for an estimated 3% of global exports and imports on average. 

As noted, the share of Intra African trade remains low: on average, 13% for intra-imports and 20% for intra-exports, while ExtraAfrican trade accounts for more than 80% of the total trade. Africa’s exports to the rest of the world consist of raw materials, such as oil, gas, minerals, and agricultural commodities, with little to no value addition.

Mathuki said: “There are many reasons why intra-Africa trade is low; these include differences in trade regimes (8 AU recognised RECs), inadequacies of trade-related infrastructure (poor intermodal connectivity), trade finance and trade information. 

“Other constraints are customs, administrative and technical barriers, limited productive capacity, lack of factor market integration and inadequate focus on internal market issues.”

With a market of around 1.3 billion consumers and a GDP of $ 3.4 trillion, Mathuki reiterated, AfCFTA will unlock many opportunities in the continent and redesign the architectural framework of its economic systems. 

“The eight AU recognised RECs are the official pillars of the African Economic Community (AEC) set out in the Abuja Treaty establishing the AEC. The RECs play a critical role in coordinating and submitting REC tariff offers, schedules, and commitments on trade in services and are fully involved in negotiations on outstanding issues,” Mathuki said.

“Active engagement and input from the private sector and interest groups at the national and REC level are needed to shape the AfCFTA trade regime and resolve challenges ahead.”

Amb. Liberata Mulamula, Tanzania’s Minister of Foreign Affairs, said her country commends the initiative of establishing collaboration between the AfCFTA and RECs towards implementation of the AfCFTA Agreement. 

“Tanzania as a member of EAC Customs Union has ratified the AfCFTA agreement and is also a member of SADC and EAC. In order to have a meaningful implementation of the agreement, the United Republic of Tanzania needs to align its participation in the AfCFTA to that of the RECs as its member.”

“I am confident that this framework will underpin the interface between the AfCFTA and RECs Free Trade Area and laydown actionable policy proposals that would assist in ensuring coherent, coordinated and fully responsive collaboration between the AfCFTA and RECs.”

Source: The New Times, 8 June 2022

by Mike Poverello

SARS Head Accreditation and Licensing, elected Vice Chair for WCO SAFE Working Group

Ms Rae Vivier, Head Accreditation and Licensing at the South African Revenue Service, has been elected by the World Customs Organisation (WCO) Member States as a Vice Chair for the WCO SAFE Working Group.   

The role of the WCO’s SAFE Working Group is to advise, as appropriate, the Policy Commission, the Permanent Technical Committee and the Secretary General on the full range of issues concerning the SAFE Framework of Standards. Such issues include matters relating to implementation and amendments concerning the SAFE Framework and further developing and monitoring other World Customs Organization (WCO) initiatives and related Customs matters that impact the operation of the SAFE Framework of Standards.

In accepting her election at the SAFE Working Group Meeting which took place on the 11 – 13 April 2022, Ms Vivier indicated that she was truly humbled by her election to the position and that it is an inordinate privilege to serve all 184 members and the WCO for the next 4 years.

Even though South Africa has been instrumental in the development of key instruments and tools designed by the WCO, it is a first time that the African continent will be holding such a leadership role in this key international platform i.e., SAFE Working Group.  The Vice Chair position will subsequently assume the role of Chair of the SAFE Working Group after two years.

Source: SARS

by Mike Poverello

SARS – Rhino horn found in luggage at OR Tambo International Airport

Customs officers of the South African Revenue Service (SARS), in collaboration with other government departments, intercepted the luggage of a female South African passenger at OR Tambo International Airport which contained twelve (12) pieces of rhino horn weighing  30.7 kilograms.

The interception of the rhino horn came after the SARS Customs and other government officials received a tip-off regarding a passenger travelling to Dubai.

The Customs team reacted swiftly and accompanied the female passenger to the Customs area for further Customs inspection. The two luggage bags and a box were inspected by a baggage scanner that identified irregular images suspected to be rhino horn.

This led to a physical inspection of the luggage and box in which twelve (12) pieces of rhino horn, weighing 30.7kg were found. The passenger together with the rhino horn were handed to the South African Police Service after which a criminal case was opened for further investigation.

Between July 2020 and December 2021, a total of 125 pieces of rhino horn, weighing 452 kilograms, were seized at OR Tambo International Airport.

  • December 2021: Six (6) pieces of rhino horn, weighing 4kg declared as ‘Personal Effects’, bound for China.
  • December 2021: Five (5) pieces of rhino horn, weighing 10kg declared as ‘Scanners’, bound for Malaysia.
  • July 2021; Thirty-Two (32) pieces of rhino horn, weighing 160kg declared as ‘Live Plants, bound for Malaysia.
  • February 2021: eighteen (18) pieces of rhino horn, weighing 63kg declared as ‘HP Cartridges Developers’, bound for Malaysia.
  • December 2020: seventeen (17) pieces of Rhino Horn weighing 72.4kg concealed in a geyser bound for Malaysia.
  • September 2020: six (6) pieces, weighing 4.9kg declared as “Coffee Beans”, bound for Malaysia.
  • July 2020: forty-one (41) pieces, weighing 137kg declared as “Fine Arts”, bound for Malaysia via Doha.

SARS Commissioner Edward Kieswetter expressed his sincere thanks to Customs officers and their counterparts from South African Police Service for working diligently to curb the smuggling of rhino horn and many related crimes.

He said, “We will leave no stone unturned to detect and prosecute these criminal syndicates and individuals who break the law.  SARS and the law enforcement agencies will spare no efforts to ensure they are brought to book.”

For more information, contact SarsMedia@sars.gov.za

by Mike Poverello

The Most Produced Cash Crops in Africa

Agriculture makes up nearly 20% of Sub-Saharan Africa’s economy—a higher percentage than any other region worldwide. 

From Nigeria to the fertile land across the East African Rift Valley, the continent is home to 60% of the world’s uncultivated arable land. 

Given the massive role of agriculture across the region, this infographic from Zainab Ayodimeji shows the most produced cash crops in Africa and their share of total global production.

To view the Top 20 Cash Crops, link to the Full Article here.

Source: The Visual Capitalist

by Mike Poverello

WCO shares good practices for drafting a rules of origin tool with the AfCFTA

At the invitation of the African Continental Free Trade Area (AfCFTA) Secretariat, the World Customs Organization (WCO) gave a presentation on international standards for the drafting of tools and instruments on rules of origin at a virtual workshop on the drafting of the AfCFTA Rules of Origin Handbook held on Monday 21 February 2022. 

In her welcoming address, the Chairperson of the Sub-Committee on Rules of Origin expressed her profound gratitude and thanks to the AfCFTA’s partner organizations, such as the WCO and UNCTAD, as well as to the Regional Economic Communities (COMESA, EAC, ECOWAS and the SADC) which had kindly accepted the invitation to share their experience of drafting rules of origin handbooks.

She reminded those taking part that Article 8.3 of the Agreement establishing the African Continental Free Trade Area laid down that any additional instruments, within the scope of that Agreement, deemed necessary, are to be concluded in furtherance of the objectives of the AfCFTA and will, upon adoption, form an integral part of the Agreement. In accordance with Article 13 of the Protocol on Trade in Goods, discussions among the negotiating bodies had led to the adoption of Annex 2 on Rules of Origin and of close to 88% of the tariff lines constituting Annex IV. She also emphasized that both of those legal documents on rules of origin had to be made operational through the use of the Rules of Origin Handbook.

With a view to the implementation of Annex 2 on Rules of Origin of the AfCFTA Protocol on Trade in Goods, she went on to stress that the 8th Meeting of the Council of Ministers, held on 28 January 2022, had decided that the work on drafting the AfCFTA’s Rules of Origin Handbook had to be given priority.

Accordingly, under Item 3 on the Agenda, the WCO gave a talk on the drafting of rules of origin handbooks, presenting some practical cases that explained the international standards applied in drawing up its tools. There was then a question-and-answer session in which the delegates from Customs administrations, trade and industry were able to have a fuller exchange on the subject of good practices on which the AfCFTA could draw in finalizing the drafting of the Rules of Origin Handbook.

The workshop was attended by more than 150 delegates, for whom it was an opportunity to learn more about good practices in relation to the drafting of operational handbooks on rules of origin, with a view to making proposals for improvements to the AfCFTA handbook, on the basis, too, of the experiences of the WCO, UNCTAD and the African RECs.

The workshop came before the 5th Meeting of the Sub-Committee on Rules of Origin to be held from 22 to 25 February 2022, at which the handbook in question would have to be drawn up in order to facilitate the implementation of AfCFTA rules of origin and thereby boost intra-African trade.

Source: WCOOMD, 24 February 2022

by Mike Poverello

WCO and AfCFTA Secretariats join forces for the implementation of the African Continental Free Trade Area

On 15 February 2022, Dr. Kunio Mikuriya, Secretary General of the World Customs Organization (WCO), and H.E. Mr. Wamkele Mene, Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, met at WCO Headquarters to sign a Memorandum of Understanding (MoU). This MoU aims at strengthening the organizational capacity, transparency and effectiveness of African Customs administrations in a sustainable manner through cooperation between both Organizations. 

In his remarks on this occasion, Secretary General Mene explained that it had been a long road since the establishment of the AfCFTA Secretariat. Today, 41 of its 54 Member States had duly ratified Rules of Origin for 87.7% of tariff headings agreed upon, to name but one milestone. He recalled the mandate of his Secretariat and stated that Customs’ involvement is essential in order to realise the ambitions laid out in the Agreement establishing the AfCFTA. He also noted that expectations were high and that communities were eager to start trading under the Agreement. The AfCFTA Secretary General then acknowledged the WCO’s expertise and role in delivering capacity building in highly-technical areas which were key for implementing the Agreement.

After congratulating his counterpart for the work done by the AfCFTA Secretariat, Dr. Mikuriya highlighted the areas where the WCO could contribute, including customs technical matters such as the Harmonized System, Valuation and Origin, as well as automation, risk management and trade facilitation which will yield economic benefits to the African continent.

He went on to outline the WCO’s long experience in developing capacity-building materials for Customs administrations and in donor coordination to ensure the efficient delivery of training. He reaffirmed WCO’s commitment to contribute to the regional integration efforts in Africa through customs modernisation.

Source: WCOOMD, 16 February 2022

by Mike Poverello

When will the AfCFTA be customs-ready?

Picture: Grayomm @ Unsplash.com

The negotiations to finalise the tariff schedules and rules of origin (RoO) of the African Continental Free Trade Area (AfCFTA) are taking place during the last two weeks of January 2022. Senior Trade Officials (STOs) and the AfCFTA Council of Ministers (COM) will then meet to confirm the results or to decide the outstanding issues. Once the State Parties have agreed on the content of these important Annexes to the AfCFTA Protocol on Trade in Goods, they must be adopted. This is the responsibility of the African Union (AU) Assembly.[1]

Trade in goods under AfCFTA preferences can then begin among the State Parties presently trading with each other under most-favoured-nation (MFN) rates. (Non-State Parties will first have to accede to the AfCFTA Agreement in terms of Article 23 of the AfCFTA Agreement.)

Those State Parties that are members of Regional Economic Community (REC) Free Trade Areas (FTAs), Customs Unions (CUs) and other trade arrangements will continue to trade under existing preferential arrangements.

Article 19(2) AfCFTA Agreement provides that

“… State Parties that are members of other regional economic communities, regional trading arrangements and custom unions, which have attained among themselves higher levels of regional integration than under this Agreement, shall maintain such higher levels among themselves”.

Article 8(2) of the Protocol on Trade in Goods adds the following:

“… State Parties that are members of other RECs, which have attained among themselves higher levels of elimination of customs duties and trade barriers than those provided for in this Protocol, shall maintain, and where possible improve upon, those higher levels of trade liberalisation among themselves”. 

However, there is also the practical requirement that the AfCFTA regime must be “customs ready”. It means that the tariff books of individual State Parties and of CUs such as the Southern African Customs Union (SACU), and presumably the East African Community (EAC) and the Economic Community of West African States (ECOWAS), need to be updated. AfCFTA columns will have to be added to these tariff books in order to ensure the new preferences will be enjoyed when customs officials and border control agencies clear goods under this new trade arrangement.

The updating of a tariff book normally happens through national legislative procedures such as the promulgation of a Government Gazette. Customs and other border officials can only act in terms of domestic legal instruments granting them the necessary powers. Trade agreements are not self-executing.[2]

The importation and exportation of goods entail detail procedures involving customs clearance. Customs clearance is the procedure of procuring permission, through its customs authority, to either take goods out of its territory (export) or have goods enter its territory (import). Failure to provide the correct paperwork will mean that goods cannot clear customs and enter the market of the country of destination.

The customs authority of a country is the administrative agency responsible for collecting tariffs and for controlling the flow of goods into and out of a country. Depending on local legislation and regulations, the import or export of some goods may be restricted or forbidden, and the customs agency enforces these rules. The customs authority is different from the immigration authority, which monitors persons who leave or enter the country, checking for appropriate documentation, apprehending people wanted by international arrest warrants, and impeding the entry of others deemed dangerous to the country. A customs duty is a tariff or tax on the importation or exportation of goods.

The approach taken by the World Customs Organisation (WCO) is to improve the security of borders, without unduly hindering legitimate international trade. The WCO initiative focusses on the entire international trade supply chain, rather than restricting customs’ interest to that aspect of the international trade transaction, when goods move across a border. The basic principle underpinning its work is to create an international mechanism for Customs Administrations to gain access to relevant information relating to international trade well in advance, for the purposes of risk management and risk assessment.[3]

The AfCFTA is a free trade agreement (FTA). This is an agreement between States that removes tariffs and other restrictions on goods which are traded between the State Parties, according to the applicable RoO. The main difference between a customs union and a free trade agreement is that even where zero (or reduced) tariffs are part of an FTA, extra bureaucracy is needed to take advantage of those tariffs. Exporting under an FTA means companies have to comply with a complex set of rules (known as preferential rules of origin) to prove that goods only come from countries who have signed up to the FTA and that such goods have been produced or manufactured in accordance with the applicable RoO. For a customs union, once the common external tariff has been paid for a product then it is in “free circulation”. Traders only have to prove the common external tariff has been paid on goods or parts they have used. This is easier to demonstrate than proving the origin of imported goods.

Source: Authored by Gerhard Erasmus, TRALAC, 24 Jan 2022

[1] Art 22 AfCFTA Agreement.

[2] Constitutional systems based on monism, may provide otherwise but will have other requirements to ensure that the executive branch of government respects the powers of the legislature.

[3] https://www.osce.org/files/f/documents/a/6/24649.pdf

by Mike Poverello

AfCFTA, EU and WCO join forces to support digital transformation of Customs work

Picture: Damien Patkowski

On 27 January 2022, representatives of the WCO, the AfCFTA Secretariat and the European Commission held a virtual meeting to review the state of play in the implementation of the African Continental Free Trade Area (AfCFTA). The meeting focused on the trade liberalization mechanism envisaged by the AfCFTA Agreement, the management of tariff offers and a possibility of setting up a continental digital platform to handle information on applicable tariff rates covering all African countries.

In opening the meeting, Mrs. Demitta Chinwude Gyang, Head of Customs at the AfCFTA Secretariat, expressed her appreciation for the support provided by the WCO and the EU on the implementation of the Harmonized System (HS) under the EU-WCO Programme for HS in Africa (HS-Africa Programme), funded by the EU. She emphasised that the trade under the AfCFTA had already started from January 2021, and 44 tariff offers had been submitted by AfCFTA signatories already. She explained that the AfCFTA Secretariat intended to create a web-based ‘tariff book’ whereby all the necessary information on tariff offers and applicable tariff rates would be made available in a user-friendly and easily accessible manner.

The representatives of the WCO and the EU welcomed the AfCFTA initiative to set up a digital tariff platform at the continental level, recalling that electronic tariffs had been successfully implemented in some African countries in the recent past, with the support of the HS-Africa Programme. They stressed that such digital tools contributed significantly to trade facilitation efforts of Customs administrations and Regional Economic Communities by providing data that were vital for trade operators. The EU and the WCO reiterated their firm commitment to offering continued support to the AfCFTA in that regard, under the HS-Africa Programme.

In conclusion, the meeting participants agreed that the initiative should start by developing terms of reference for the implementation of the AfCFTA digital ‘tariff book’ and launching a tendering process to select a service provider that would carry out the required technical work. It was felt that this project would contribute to scaling up digital transformation of Customs, announced as the theme of the year 2022, and create a foundation for the next steps in the establishment of the Customs union on the African continent.

For more details, please, contact capacity.building@wcoomd.org.

by Mike Poverello

Africa and the adoption of HS2022

Picture: Samendra Singh on Unsplash

The new edition of the Harmonised Commodity Description and Coding System 2022 (HS2022) entered into force on the 1st of January 2022. This development means that Customs tariffs, associated Information, Communication and Technology (ICT) management systems as well as accompanying Harmonised System (HS) tools and instruments must have been successfully migrated from the previous edition (HS2017) to the new version (HS2022).

A few weeks prior to entry into force of HS2022, African countries’ experiences in this regard still indicated widely ranging inconsistencies and discrepancies in the application of the HS in general. Whilst all the Contracting Parties were expected to have fully migrated to the HS2017 by then, apparently some had not yet done so. The majority of those were still either using HS2012 or even HS2007, whilst some had huge delays in rolling out HS2017. Only 30 African countries had successfully migrated to HS2017 and were already applying it. At the launch of the operational phase of the African Continental Free Trade Area (AfCFTA) during the 12th Extraordinary Session of the Assembly of the Union on the AfCFTA in Niamey, Niger held on the 7th of July 2019, HS2017 was already in its third year. At that time, half of the African Union Member States were still to ratify the AfCFTA.

Source: TRALAC, Rwatida Mafurutu, 1 February 2022

by Mike Poverello

Nigeria – Lekki Seaport now 80% complete, to be commissioned 2022

The Minister of Transportation, Chibuike Amaechi, has urged contractors of the Lekki Deep Seaport Project to speed up work to enable the government approve all the necessary processes before the next election.

Mr Amaechi made this known in a statement on Saturday while inspecting the ongoing construction of the Lekki Deep Seaport Project in Lagos.

He, however, commended the contractors for the progress of work done so far stating that in less than five months, a lot of civil work had been done.

“I want to congratulate you for the very huge progress. By the time we came here, there were no civil works; it was just pure sand. You have tried.

“I am suggesting that if you work day and night you will go far and complete the work before commissioning. If the President sees it, approval will be easier.

“You need to speed up the work so we can get approval from the government side before election, process of election will be completed in July.

“This is because by law, six months to election people start politics and if you wait till that time, you won’t meet anyone in the office,” he said.

Mr Amaechi, however, said that the port should be automated to avoid all forms of physical contact.

Speaking during the tour, the Chief Technical Officer, Lekki Port, Steven Heukelom, explained that construction work on the project was on course and as scheduled.

He noted that dredging and reclamation works had reached 89.93 per cent completion, Quay Wall 85.65 per cent completion, Breakwater 79.66 per cent completion, and the landside infrastructure development 67.82 per cent completion.

He added that this brings total works carried out on the project to approximately 80 per cent completion stage.

Mr Heukelom also informed the minister that work had commenced on the marine services jetty, which the NPA would use to carry out their marine services obligation.

He commended the Acting Managing Director, Mohammed Bello-Koko, for the support and partnership in preparing the port to start operations.

Mr Bello-Koko reaffirmed the agency’s readiness to provide marine services for the port’s operations.

To this end, he disclosed that NPA was procuring tug boats and other necessary infrastructure for the smooth take-off of the Port.

In his remarks, the Chief Operating Officer of Lekki Port, Laurence Smith, reaffirmed the company’s commitment to delivering the project by the fourth quarter of 2022.

He noted that the EPC Contractor, China Habour Engineering LFTZ Enterprise, was working day and night to make this commitment a reality.

Mr Smith expressed confidence that the Port, upon completion, would be a world-class port and would become a regional distribution and transhipment hub for the African region.

The News Agency of Nigeria reports that Lekki Port is being developed by Tolaram and China Harbour Engineering Company.

The Lagos State Government and NPA are also shareholders in the project company.

The port is scheduled to start port operations by the end of 2022.

Source: PremiumTimesng, 23 January 2022

by Mike Poverello

ICC and Partners Launch eTradeHub

The International Chamber of Commerce (ICC) in partnership with West Blue Consulting, United Parcel Services (UPS), Trade Law Center (TRALAC) have officially launched the eTradeHubs portal, http://www.etradehubs.com.

The eTradeHubs portal is a one-stop for Trade Tools, Information & Collaboration which aims to reduce the time and cost of doing business by supporting businesses at all levels of maturity – the micro enterprise to the multinational.

Features

The portal which was virtually launched last week Thursday has features such as a multi country Tariff and Trade Information Tool and a Duty Calculator.

A first-time trader or existing trader wishing to import raw materials or export finished goods, can search on the portal.

The Duty Calculator further provides an estimate of the customs duty, tax and levies of the destination region or country to aid in financial and logistical planning.

eTradeHubs also provides a Trade Management Tool. Equipped with accurate trade information, the trader can proceed to transact, by generating trade compliant documentation, manage compliance, workflow and costs – all on the same platform, without the need to visit multiple regulatory agencies, entities, websites and physical offices as done previously.

The portal currently provides country data on Ghana, Kenya, Nigeria, South Africa, Zambia and the ECOWAS sub region, with more countries and sub regions to be introduced in support of the Digitise 5 million African SMES initiative.

CC, UPS, Tralac, and West Blue Consulting through a Memorandum of Understanding (MOU) announced a partnership to support women-led small and medium-sized enterprises (SMEs) in Africa.

The partners will offer capacity building programmes and tools, including co-developed trade and information portals called “e-Trade Hubs,” advocate for enabling public policy, and create electronic guidelines to help women entrepreneurs scale-up and digitise their businesses.

COVID-19

The Secretary General of ICC, Mr John W.H. Denton AO in his remarks said the economic, social, and health consequences associated with the COVID-19 pandemic had unequally impacted the lives and livelihoods of women business owners everywhere. 

“We are extremely proud to partner with UPS, Tralac, and West Blue Consulting to level the playing field in Africa and provide women entrepreneurs with the required resources to digitise their businesses. Women-led businesses are the backbone of their local economies – we can’t afford to leave them behind,” he added,

The CEO and Founder of West Blue Consulting,  noted that “The adoption of solutions by women in business and trade, will ensure benefits such as an increased ability for women to work from home whilst raising families; improved global market access, employment opportunities and a shift of women from the informal sector to the formal.

“The portal will provide a 24/7 collaborative space where women traders and entrepreneurs in the African Continental Free Trade Area (AfCFTA) and of course their male peers can connect and access timely and up to date information, skills and operational tools, offered by various providers”, she added.

Information

Ms Mintah expressed delight to partner with ICC, UPS and TRALAC to provide the needed skills training, trade information and tools via the eTradeHubs portal http://www.etradehubs.com.

President of UPS, Ms Penny Naas, the International Public Affairs & Sustainability said “Research shows that only 1 out of 5 businesses that exports is led by a woman. At UPS, we’re moving our world forward by helping women-run businesses maximize their participation in trade through public-private partnerships that provide policy recommendations and support with knowledge sharing and building skills”.

 Executive Director of Tralac, Ms Trudi Hartzenberg, said the adoption of digital trade solutions for the AfCFTA would address many border management challenges that disproportionately impact women traders.

Source: GraphicOnline, 11 March 2021