Category / Border posts

by Mike Poverello

Beit Bridge – ZIMRA and Immigration gear up for congestion

beitbridge

Beitbridge – crossing the Limpopo river

The Department of Immigration in Beitbridge has put in place mechanisms aimed at dealing with congestion at the country’s busiest border post in anticipation of an increase in the volume of traffic during the festive period. Assistant regional immigration manager in charge of Beitbridge Border Post, Mr Charles Gwede, said they have since held a series of meetings with key stakeholders and their South African counterparts to address congestion at the border.

“We have started preparing for the festive period in anticipation of a huge influx of travellers and all necessary strategies are now in place to help speed up the clearance of people during the festive period,” he said. “We are suspending leave and off-days for staff between 15 December and 16 January next year.

“As part of our decongestion drive we will scramble our shifts to maximise on manpower during the normal and extra peak days. In fact, starting from 15 December we expect a huge influx of travellers hence between 14 and 17 December, 21 and 24 December and 4 to 7 January, we will dissolve our shifts to ensure that we have more officers per shift who would effectively manage the queues and speed up the clearance process,” he said.

Mr Gwede said they were expecting 20 officers from other stations to beef up the local staff and ensure that all check points and counters were adequately manned. Beitbridge Border Post has a staff complement of 47 officers and support staff.

“As border stakeholders, we held several inter-border meetings with our South African counterparts to discuss and explore ways and strategies aimed at dealing with congestion during extra peak periods.

As part of their decongestion strategy, Mr Gwede said they would categorise travellers and create more counters to reduce queues. According to statistics, immigration officials at the border handled 73 825 travellers between Monday and Wednesday on both arrival and departure sides.

The Zimbabwe Revenue Authority (Zimra) spokesperson, Mr Canisio Mudzimu, said they would deploy relief officers to Beitbridge Border Post to beef up the local staff and help speed up the customs clearance process. “We are geared up in terms of facilitating the smooth movement of both human and vehicular traffic passing through Beitbridge Border Post during the festive season. We will deploy extra officers from less busy stations to Beitbridge Border Post during the festive period and to assist in border operations,” he said.

Beitbridge Border Post requires at least 247 customs officers to man it. The border post, which is the country’s busiest inland port of entry, has an establishment 141 officers. Mr Mudzimu said they would create separate traffic lanes to cater for tourists, returning residents, private motorists, commercial, buses and pedestrians to speed up the flow of traffic and reduce congestion.

Touts and bogus clearing agents continue to find their way into the customs yard where they would swindle unsuspecting travellers of their money under the guise of offering assistance. Beitbridge is the busiest inland port of entry in sub-Saharan Africa, which handles a huge volume of both human and vehicular traffic passing though daily. Commercial trucks destined for East and Central African countries such as Tanzania, the Democratic Republic of Congo and Zambia also pass through the border post.

On a normal day, the border handles between 6 000 and 8 000 travellers daily with the figures rising to 20 000 during the peak period. Source: Bulawayo24.com

Related articles
by Mike Poverello

Zambia – government to crack whip on crossborder smuggling

New Kasumbalesa border post facility - time to jack up cross-border security

New Kasumbalesa border post facility – time to jack up cross-border security

Copperbelt Permanent Secretary Stanfold Msichili says Government will enhance security measures to curb rampant illegal activities at Kasumbalesa Border Post which threaten public security. Mr Msichili has also directed Chililabombwe acting District Commissioner, Frank Siatwinda, to establish how Congolese managed to set up a booming trading place on the Zambian soil where assorted wares were being sold.

He said the Government would find a lasting solution to combat rampant illegal activities which threatens public security and that there were plans to engage concerned parties from the Democratic Republic of Congo (DRC). The Open Market has been built on our land because of its proximity to the trading area. It will not be easy to control the situation but Government is committed to finding a long-term solution.

Mr Msichili was saddened that scrap metal from DRC, which was banned for export in that country, was being smuggled into Zambia and reloaded for onward transportation to South Africa. He’s adamant that these issues should be addressed by the police, customs and immigration because we are allowing scrap metal to pass through the country. Earlier, Zambia Revenue Authority (ZRA) Kasumbalesa Border station manager Levy Simatimbe told Mr Msichili’s delegation that illegal activities were rampant at the border with some Congolese traders at the controversial Open Market on the Zambian side selling the banned alcohol, ‘Tujilijili’.

During the tour, Kasumbalesa police assistant superintendant Anthony Mphanza said the existence of the Bilanga Township, a few metres from the Zambian side where the population of foreigners was swelling posed a security threat. The Bilanga Township may encroach the Zambian side because its population of foreigners was concentrating along the areas where there was potential for trading in essential basic commodities, like maize meal, cooking oil, sugar, timber, household items, among other items. Illegal trade in cement was becoming a huge public concern at the border. It is estimated that about five tonnes of cement was illegally sold to DRC everyday. Congolese freely come to Comesa Market at Kasumbalesa Border to sell and buy different items. They carry about 10 bags of 25 kilogrammes on a bicycle. Source: The Times (Zambia)

by Mike Poverello

Bribery along the corridor

Notwithstanding efforts to minimize collusion, bribery and corruption through increased use of technology, the underlying fact remains that human intervention cannot be completely removed from nodes within the supply chain.Identifying the causes and parties involved in such activity is only the start (yet minuscule) aspect of a problem entrenched in the distrust of government officials and border authorities in particular. Integrity is based on trust. If trust is the placement of hordes of incompetence in public jobs to secure votes, then you will not need to look very far to understand that “the bribe” epitomizes the ultimate enterprise of individuals either bent on extortion, or to avail their services (like prostitutes  to the crooked trader. The following article “Bribery as a non-tariff barrier to trade” (click hyperlink to download) takes account of a wide-spread of role players as to their views and attitudes on the matter. In my view it is a template for what actually occurs at every border across the continent. 

Transparency International (Kenya) and Trade Mark (East Africa) have collaborated in the publication of a review on the subject of bribery in the EAC region. The executive summary elucidates the context – 

The East African Common Market Protocol that came into force in 2010 provides for the free flow of goods, labour, services and capital across the EAC bloc. To achieve this, members undertook to remove all tariff and non-tariff barriers to trade. While progress has been made on the removal of the former, doing away with the Non-tariff barriers along the main transport corridors of the region has remained a challenge.

Taking cognizance of this, Transparency International-Kenya, Uganda, Rwanda and Burundi in conjunction with the Transparency Forum in Tanzania conducted a survey along EAC‘s main corridors — the Northern and Central corridors- that form a vital trade link in the region between August and November 2011. The survey objectives were to measure the impact of bribery practices and create public awareness on the vice.

In determining the size of bribe payable, negotiations came top. The value of consignment and the urgency were some of the other factors sighted by the respondents. According to the survey, truck drivers have devised various means of accounting for bribery expenses to their employers. The most common is road trip expense’. These are anticipated regular amounts given prior to the start of a journey and ad hoc miscellaneous expenses. In the transporters’ books of accounts, the bribes are normally disguised either as anticipated regular amounts or as ad hoc miscellaneous expenses. Source: Transparency International and Trade Mark

Related articles
by Mike Poverello

Building hard and soft infrastructure to minimise regional costs

I post this article given it ties together many of the initiatives which I have described in previous articles. The appears to be an urgency to implement these initiatives, but the real question concerns the sub-continent’s ability to entrench the principles and maintain continuity. At regional fora its too easy for foreign ministers, trade practitioners and the various global and financial lobbies to wax lyrical on these subjects. True there is an enormous amount of interest and ‘money’ waiting to be ploughed into such programs, yet sovereign states battle with dwindling skills levels and expertise. Its going to take a lot more than talk and money to bring this about.

South Africa is championing an ambitious integration and development agenda in Southern Africa in an attempt to advance what Trade and Industry Minister Rob Davies describes as trade and customs cooperation within the Southern African Customs Union (SACU), the Southern African Development Community (SADC) and other regional trade organisations.

Central to pursuing this intra-regional trade aspiration are a series of mechanisms to combine market integration and liberalisation efforts with physical cross-border infrastructure and spatial-development initiatives. Also envisaged is greater policy coordination to advance regional industrial value chains. “Trade facilitation can be broadly construed as interventions that include the provision of hard and soft infrastructure to facilitate the movement of goods, services and people across borders, with SACU remaining the anchor for wider integration in the region,” Davies explains.

This approach is also receiving support from the US Agency for International Development (USAid), which recently hosted the Southern African Trade Facilitation Conference, held in Johannesburg.

Trade programme manager Rick Gurley says that virtually every study on trade in sub- Saharan Africa identifies time and cost factors of exporting and importing as the most significant constraints to regional trade potential. Limited progress has been made by SADC member States and SACU partners to tackle the factors undermining trade-based growth, limiting product diversification and increasing the price of consumer goods, including of foodstuffs. However, far more would need to be done to realise the full potential of intra-regional trade.

Regional Alliance
One high-profile effort currently under way is the Tripartite Free Trade Area (T-FTA), which seeks to facilitate greater trade and investment harmonisation across the three existing regional economic communities of the SADC, the Common Market of Eastern and Southern Africa and the East African Community.

The existing SADC FTA should be fully implemented by the end of the year, with almost all tariff lines traded duty-free and, if established, the T-FTA will intergrate the markets of 26 countries with a combined population of nearly 600-million people and a collective gross domestic product (GDP) of $1-trillion. At that size and scale, the market would be more attractive to investors and could launch the continent on a development trajectory, Davies avers. It could also form the basis for a later Africa-wide FTA and a market of some $2.6-trillion.

However, as things stand today, intra- regional trade remains constrained not merely by trade restrictions but by a lack of cross-border infrastructure, as well as poor coordination and information sharing among border management agencies such as immigration, customs, police and agriculture.Cross-national connectivity between the customs management systems is also rare, often requiring the identical re-entry of customs declarations data at both sides of the border, causing costly and frustrating delays.

USAid’s regional economic growth project, the Southern African Trade Hub, is a strong proponent of the introduction of several modern trade-facilitation tools throughout the SADC – a number of which have already been successfully pioneered. These tools, endorsed by the World Customs Organisation (WCO) Framework of Standards, which offers international best-practice guidelines, are aimed at tackling the high costs of exporting and importing goods to, from, and within Southern Africa, which has become a feature of regional trade and discouraged international investment.

Bringing up the Rear
A country’s competitiveness and the effec- tiveness of its trade facilitation regime are measured by its ranking on World Bank indices and, with the exception of Mozambique, Southern African States perform poorly – with most in the region settling into the lowest global quartile of between 136 and 164, out of a total of 183. “Our transaction costs in Africa across its borders are unacceptably high and inhibit trade by our partners in the private sector,” says WCO capacity building director Erich Kieck. “We need our States to develop good ideas and policies, but the true test lies in their ability to implement them,” he notes.

He adds that not only does trade facilitation require efficient customs-to-customs connectivity, but also demands effective customs-to-business engagement, adding that, while customs units are responsible for international trade administration, they are not responsible for international trade. “The private sector is the driver of economic activity and international trade, and government’s responsibility is to understand the challenges faced by the business community and develop symbiotic solutions,” Kieck notes.

Despite the establishment of regional trade agreements and regional economic communities in Southern Africa, many partner- ships have failed to deliver on their full potential to increase domestic competitiveness.

In a report, African Development Bank (AfDB) senior planning economist Habiba Ben Barka observes that, despite the continent’s positive GDP growth record – averaging 5.4% a year between 2005 and 2010 – it has failed to improve its trading position or integration into world markets. In 2009, Africa’s contribution to global trade stood at just under 3%, compared with nearly 6% for Latin America and a significant 28% for Asia.

“Since 2000, a new pattern of trade for the continent has begun to take centre stage, as Africa has witnessed an upsurge in its trade with the emerging Brazil, Russia, India and China economies. Overall, Africa is trading more today than in the past, but that trade is more with the outside world than internally,” says Ben Barka. She adds that while many African regional economic communities have made some progress in the area of trade facilitation, much greater effort is required to harmonise and integrate sub-regional markets.

To address enduring trade barriers, consensus among business, government and trade regulators appears to lean towards the adoption of one or a combination of five facilitation tools. These include the National Single Window (NSW), the One-Stop Border Post (OSBP), cloud-based Customs Connectivity, Coordinated Border Management (CBM) and Customs Modernisation Tools.

A National Single Window
NSWs connect trade-related stakeholders within a country through a single electronic-data information-exchange platform, related to cross-border trade, where parties involved in trade and transport lodge standardised trade-related information or documents to be submitted once at a single entry point to fulfil all import, export and transit-related regulatory requirements.Mauritius was the first SADC country to implement the NSW and consequently improved its ranking on the ‘Trading Across Borders Index’ to 21 – the highest in Africa. It was closely followed by Ghana and Mozambique, which have also reported strong improvements.

Developed in Singapore, the benefits of government adoption include the reduction of delays, the accelerated clearance and release of goods, predictable application, improved application of resources and improved transparency, with several countries reporting marked improvement in trade facilitation indicators following the NSW implementation.

In South Africa, the work on trade facili-tation is led by the South African Revenue Service (SARS), which focuses on building information technology (IT) connectivity among the SACU member States, and strengthen- ing risk-management and enforcement measures. However, SARS’ approach to the NSW concept remains cautious, Davies explains. “SARS has considered the viability of this option as a possible technological support for measures to facilitate regional trade, but considers that this would fall outside the scope of its current approach and priorities in the region,” he said.

One-Stop Border Posts
As reported by Engineering News in December last year, effective OSBPs integrate the data, processes and workflows of all relevant border agencies of one country with those of another, which culminates in a standardised operating model that is predictable, trans- parent and convenient. An OSBD success story in Southern Africa is the Chirundu border post, where a collaboration between the Zambia and Zimbabwe governments has culminated in a single structure, allowing officers from both States to operate at the same location, while conducting exit and entry procedures for both countries.

Launched in 2009, this OSBP model is a hybrid of total separation, joint border operations and shared facilities in a common control zone. Implementation of the model has reduced clearance times to less than 24 hours, significantly reduced fraudulent and illegal cross-border activity, enabled increased information sharing between border agencies and reduced the overall cost of export and import activities in the area.

Earlier this year, former South African Transport Minister Sibusisu Ndebele indicated that Cabinet was looking into establishing a mechanism that would bring all border entities under a single command and control structure to address the fragmentation in the country’s border operations, particularly at the high-traffic Beitbridge post between South Africa and Zimbabwe. “The ultimate vision is to create one-stop border operations to facilitate legitimate trade and travel across the borders,” he said.

Customs Connectivity and Data Exchange
Improved connectivity between customs limbs in sub-Saharan Africa has perhaps made the most indelible strides in the region, with improved IT connectivity between States identified as a priority by Sacu.

This includes customs-to-customs inter- connectivity, customs-to-business inter- connectivity and interconnectivity between customs and other government agencies. SACU members have agreed to pursue the automation and interconnectivity of their customs IT systems to enable the timely electronic exchange of data between administrations in respect of cross-border movement of goods. “As a consequence of this acquiescence, we have identified two existing bilateral connectivity programmes as pilot projects to assess SACU’s preferred connectivity approach, cloud computing between Botswana and Namibia and IT connectivity between South Africa and Swaziland,” says SACU deputy director for trade facilitation Yusuf Daya. He adds that a regional workshop was recently convened to explore business processes, functions, data clusters and the application of infrastructure at national level to improve and develop intra-regional links.

Coordinated Border Management
The SADC has been a strong proponent of CBM efforts in the region, which promotes coordination and cooperation among relevant authorities and agencies involved in, specifically, the protection of interests of the State at borders. “The union has drafted CBM guidelines for its members on implementation, based on international best practice, and has received indications of interest from several member States,” explains SADC Customs Unit senior programme officer Willie Shumba.He adds that CBM is a key objective of regional integration, enabling the transition from an FTA to a customs union and, eventually, to a common market, through effective controls of the internal borders.

Customs Modernisation
South Africa’s customs modernisation initiative is well advanced and came about following Sars’ accession to the WCO’s revised Kyoto Convention in 2004, which required customs agencies to make significant changes to it business and processing models. These changes included the introduction of simplified procedures, which would have fundamental effects on and benefits for trade and would require a modern IT solution.

Since its inception, the SARS Customs Modernisation Programme has gained tremendous momentum, with amendments to the Passenger Processing System and the replacement of SARS’s Manifest Acquittal System in the Automated Cargo Management system. Further adjustments were made to enable greater ease of movement of goods, faster turnaround times and cost savings, as well as increased efficiency for SARS. This phase included the introduction of an electronic case-management system, electronic submission of supporting documents, the centralisation of back-end processing in four hubs and an electronic release system and measures to enhance the flow of trucks through borders – in particular at the Lebombo and Beitbridge borders.

Proper Planning
AfDB’s Ben Barka warns that, prior to the implementation of any border improvement efforts by countries in Southern Africa, a thorough analysis and mapping of each agency’s existing procedures, mandate and operations should be undertaken.“Based on these findings, a new set of joint operational procedures need to be agreed upon by all involved agencies and must comply with the highest international standards,” she says.

Development coordination between States is essential, as the largest disparity among regional groupings, in terms of intra-regional trade, is clearly attributable to their differentiated levels of progress in various areas, including the removal of tariffs and non-tariff barriers, the freedom of movement of persons across borders and the development of efficient infrastructure. Source: Engineering News.

Related articles
by Mike Poverello

Border Madness!

Mainland Chinese visitors line up and wait for check in outside Hong Kong’s Sheung Shui train station with packages of diapers to be parallel imported into Shenzhen for resale.

While communist China bears the brunt of criticism for its exportation of low cost and in many cases inferior products to the rest of the world, the following article suggests one should spare a thought for the Chinese citizens themselves given what they have to put up with from the authorities between Hong Kong and Shenzhen.

The recent hard crackdown on smugglers and couriers across the boundary between Hong Kong and Shenzhen has cut deeply into the business of parallel trading on both sides of the border, and thus far, appears to have reduced the nuisance problem caused to residents of the northern New Territory. However, with the crackdown on-going and the Mass Transit Railway Corporation (MTR) adding further pressure by restricting the dimensions and weight of passenger luggage going across the border, complaints have started buzzing, that the move may have frightened away the passenger couriers, but not the syndicates coordinating them behind the scenes.

Effective 9 October 2012, the Mass Transit Railway Corporation (MTR) imposed a maximum weight limitation of 32 kilograms or 130 centimetres in length for passenger luggage on the East Rail Line, under a three-month trial scheme. Could you just imagine this at an African border crossing? Passengers are allowed only one piece of baggage. All their small parcels and suitcases are required to be bundled up into a single “package,” all part of the bid to curb the passenger-couriers whose clamouring and crowding had become a serious issue for neighbours of MTR in New Territories.

The restrictions were seen as MTR’s contribution to the collaborative effort that involved governments on both sides of the border, to cut down on so-called parallel traders and smugglers. MTR’s new rule has, in general, earned praise from residents of northern New Territory because the nuisance problem caused by the traders/smugglers has been alleviated. However, for residents of Shenzhen, who travel back and forth every day, or residents of `other parts of the mainland who come to Hong Kong for shopping, the size and weight limitations seem be “unnecessary” and “troublesome”.

“I was often asked to buy things in Hong Kong on my way home: cooking oil, rice, baby formula, tissues, etc. I really don’t have time to care about how heavy they are or how long they are,” said Go, a resident of Shenzhen. He Hua, also a Shenzhen resident living in Luohu district who comes to Hong Kong to go shopping two to three times a month, also doesn’t like the new limitation. “I came to Hong Kong regularly to buy things for myself and my family. I paid my money and followed regulations of the Customs, why should I worry about my weight and length? If the goods are all legal, why can’t I take them on the train at one time?” said Hua, who had carried six cans of baby formula with her, which she claimed were for her elder sister’s baby.

Recently, there has been a strengthened effort to combat parallel trade, with a collaborative effort between the Customs and Excise Department of the SAR and the Shenzhen Anti-Smuggling Bureau. The action uncovered 120 cases of parallel trading and made 123 arrests, with the unpaid taxation of the confiscated goods amounting to one million yuan. On the other side of the border, business associated with cross boundary goods was also affected. In North Huaqiang district in Shenzhen, which had been long recognized as the “centre of parallel trading” of “grey goods” from Hong Kong, business has shrunken since the crackdown.

A shop owner in North Huangqian area told China Daily that he had expected to make a huge profit by selling iPhone 5, the latest release by Apple Corporation. It never happened, because his Hong Kong supplier informed him that it was too difficult and that it was risky to get the iPhone 5 across the border. And the seller couldn’t get the supply he had counted on.

“The whole business chain of parallel trading depends on the ‘suppliers’ to smuggle goods from Hong Kong to Shenzhen, especially electronic goods. Now the suppliers have trouble getting through the border, (so) we have trouble getting the goods,” said the anonymous shop owner. Because of serious supply shortage, the price of “grey goods” has soared significantly on the mainland side of the border. The best example was iPhone, which sold originally at HK$5,688 (US$733.8) at the Apple Store in Hong Kong, but was priced at 8,000 yuan (US$1276.5) at the anonymous shop owner’s store. Insiders of the courier industry also told China Daily that the price for smuggling goods across the border with “ant house-moving” tactics had increased from 22 yuan per kilogram to a record high of 50 yuan per kilogram.

The business of stores that sell Hong Kong goods in Shenzhen has picked up since the crackdown, as people who live along the border in Shenzhen choose to buy daily-use goods in local stores – like cooking oil, rice and baby formula, instead of going to Hong Kong by themselves. “We have adequate Hong Kong goods, don’t worry; they are all fresh and delivered to us fresh every day,” said the owner of a store selling Hong Kong goods in Shatoujiao, or Sha Tau Kok in Cantonese, in eastern Shenzhen. The store owner refused to answer how he managed to get “adequate supply” from Hong Kong every day.

The crackdown on smugglers, especially the MTR weight limitation, had stopped individual couriers; however, it didn’t shut down the syndicates coordinating behind the scenes. What’s more, there are some 157 online stores that sold Hong Kong goods on Taobao, the biggest online shopping market in the mainland. The record on the website showed that one of the big shops had sold out 1,357 pieces of Hong Kong goods in the past week, 90 percent of which are daily use goods and food. Source: The China Daily

by Mike Poverello

Regional Blocs seek to remove Trade Barriers

THREE regional economic communities (Recs) have taken the lead as Africa seeks to remove trade barriers by 2017. The establishment of a Continental Free Trade Area (CFTA) was endorsed by African Union leaders at a summit in January to boost intra-Africa trade. Sadc, Common Market for Eastern and Southern Africa (Comesa) and the East African Community (EAC) have combined forces to establish a tripartite FTA by 2014.

Willie Shumba, a senior programmes officer at Sadc, told participants attending the second Africa Trade Forum in Ethiopia last week that the tripartite FTA would address the issue of overlapping membership, which had made it a challenge to implement instruments such as a common currency. “…overlapping membership was becoming a challenge in the implementation of instruments, for example, common currency. The TFTA is meant to reduce the challenges,” he said.

Countries such as Zimbabwe, Tanzania and Kenya have memberships in two regional economic communities, a situation that analysts say would affect the integration agenda in terms of negotiations and policy co-ordination. The TFTA has 26 members made up of Sadc (15), Comesa (19) and EAC (5). The triumvirate contributes over 50% to the continent’s US$1 trillion Gross Domestic Product and more than half of Africa’s population. The TFTA focuses on the removal of tariffs and non-tariff barriers such as border delays, and seeks to liberalise trade in services and facilitation of trade and investment.

It would also facilitate movement of business people, as well as develop and implement joint infrastructure programmes. There are fears the continental FTAs would open up the economies of small countries and in the end, the removal of customs duty would negatively affect smaller economies’ revenue generating measures.

Zimbabwe is using a cash budgeting system and revenue from taxes, primarily to sustain the budget in the absence of budgetary support from co-operating partners. Finance minister Tendai Biti recently slashed the budget to US$3,6 billion from US$4 billion saying the revenue from diamonds had been underperforming, among other factors.

Experts said a fund should be set up to “compensate” economies that suffer from the FTA. Shumba said the Comesa-Sadc-EAC FTA would create a single market of over 500 million people, more than half of the continent’s estimated total population. He said new markets, suppliers and welfare gains would be created as a result of competition. Tariffs and barriers in the form of delays have been blamed for dragging down intra-African trade.

Stephen Karingi, director at UN Economic Commission for Africa, told a trade forum last week that trade facilitation, on top on the removal of barriers, would see intra-African trade doubling. “The costs of reducing remaining tariffs are not as high; such costs have been overstated. We should focus on trade facilitation,” he said.

“If you take 11% of formal trade as base and remove the remaining tariff, there will be improvement to 15%. If you do well in trade facilitation on top of removing barriers, intra-African trade will double,” Karingi said. He said improving on trade information would save 1,8% of transaction costs. If member states were to apply an advance ruling on trade classification, trade costs would be reduced by up to 3,7%.He said improvement of co-ordination among border agencies reduces trade costs by up to 2,4%.Karingi called for the establishment of one-stop border posts.

Participants at the trade forum resolved that the implementation of the FTA be an inclusive process involving all stakeholders.They were unanimous that a cost-benefit analysis should be undertaken on the CFTA to facilitate the buy-in of member states and stakeholders for the initiative. Source: allAfrica.com

Related articles
by Mike Poverello

Rwanda-DRC Border trade feels pinch from political stand-off

Spare a thought for the informal traders in this region. The terminology is also somewhat humorous, if not ‘offensive’ to an overly liberal mind – democratic South Africans in particular.

Trade along the Rwanda-DRC border is still going strong, although with some difficulty, despite the ongoing political tensions between the two neighbors.The Rwanda Focus visited Gisenyi, from where it has been reported that several Rwandan civilians who have attempted to cross into DRC for business have allegedly been arrested and tortured.

“You can’t go in there but if you insist, then be ready to die or to be tortured by the authorities in Congo,” said Safina Mukankusi, a cross-border trader. According to locals here, anyone with links to Rwanda in form of passport, looks or language is a target for the Congolese authorities. The irony is Gisenyi is full of Congolese civilians loaded with all sorts of merchandise bought from Rwandan markets which they then carry to the DRC.

It’s also here that massive petty smuggling takes place. “There are so many ‘fat’ women around here,” said a Rwandan customs official, explaining they are stuffed with several garments in which they then hide commodities such as alcohol and sell them on the Rwandan side at a profit. “Some make more than 20 trips per da,y often smuggling a single commodity per journey… but these are poor people who are looking for a meal from their petty deals,” the official revealed. From the proceeds from smuggled goods, the Congolese then buy food and all sorts of stuff which they take back home to sell.

With the current instability however, there’s a new development. “Many Congo-men are coming to sleep here at night and go back home during day for fear of attacks,” said Fidel, a resident of Gisenyi. He says most of them sleep on the streets while others have rented some cheap houses in which they spend the night, often in groups.

Looking at the people here, it’s quite hard to imagine that their country is home to some of the world’s most valuable minerals such as gold and diamonds. Bribes and other corrupt dealings are the quickest ways to get a service done according to Rwandan traders. “Once they know you have money, they will detain you until you part with some of it, it’s mostly those that don’t have anything who are tortured,” explained Laurent Makubu, who claims he has been detained but bribed the Congolese police with $15 to secure his freedom.

While the Congolese who cross to Rwanda report no harassment, it remains a mystery why their Rwandan counterparts are the target of mistreatment on the other side. As a result, most Rwandan traders say they have resorted to using Congolese middlemen to get goods from the DRC side but at a much higher cost as the middlemen charge for their service. Source: Rwanda Focus (Kigali)

by Mike Poverello

Ressano Garcia – Border Operations Assessment

As part of its Coordinated Border Management (CBM) program, the Southern African Trade Hub (SATH) undertook a Border Operations Assessment (BOA) at Ressano Garcia along the Mozambique/South Africa border. The objective of the assessment was to establish processes used by the different agencies to clear goods, identify challenges and recommend mechanisms to addresses obstacles. The assessment also entailed establishing the time it took for trucks to cross the border by physically recording arrival and departure times at points where the clearance of goods was undertaken.

SATH held discussions with both public and private agencies operating at the border: Customs, Immigration, Health, Agriculture, Police, Traders Association, Clearing and Forwarding Agents and Insurance Companies. The agencies explained their roles and mandates, how they carry out their day to day operations at the border, their working relations with other agencies at the border and the challenges they face in carrying out their duties.

SATH also had discussions with the One Stop Border Post (OSBP) project team to assess progress on the initiative. The OSBP is at an advanced stage and only awaits the adoption of the legal framework by South Africa, which is anticipated by the end of 2012.

Findings of the BOA and recommendations will be disseminated through a national and border workshops to which senior officials of agencies operating at the border and border officials will be invited. At these workshops Joint Border Committees will be established to take the recommendations forward to streamline border management.Source: SA Trade Hub

Related articles
by Mike Poverello

Thick Borders – Thin Trade

It’s quite amazing the number of reports featured in various african media across the continent pushing the ‘free trade’ agenda. The incumbent governments on the other hand are naturally concerned with dwindling tax collections, while at the same time increasing incidents of graft, collusion, and corruption run rampant at the border. While the following article states the obvious, unfortunately, nowhere will you find or read a practical approach which deals with increased ‘automation’ at borders and the consequential re-distribution of ‘bodies’ to other forms of gainful employment. Its jobs that will be on the line. Few governments wish to taunt their electorates – non-essential jobs are a fact of life and are destined to stay if that is what will earn votes and a further term in power. Moreover, there is no question of removing internal borders with the emphasis on costly ‘One-Stop Border’ facilities. To some extent the international donor community won’t mind this as there’s at least some profit and influence in it for them.

Poverty in Sub- Saharan Africa is a man-made phenomenon driven by internal warped policies and international trade systems. The continent cannot purport to seek to grow while it blocks the movement of goods and services through tariff regimes at the same time Tariff and non-tariff barriers contribute to inefficient delivery systems, epileptic cross-border trading and thriving of illicit/contraband goods.

This ultimately harms the local and regional economy. Delays at ports of delivery, different working hours and systems of control across the continent, unnecessary police roadblocks and poor infrastructure condemn countries to prisons of inter-regional and intra-regional trade poverty.

According to the United Nations Economic Commission for Africa, removal of internal trade barriers would lead to US$25 billion per year of intra-regional exports in Africa, an increase by 15,4 percent by 2022. Making African border points crossings more trade efficient would increase intra-regional trade by 22 percent come 2020. Trade barriers in East Africa Community alone increase the cost of doing business by 20 percent to 40 percent.

Such barriers include the number of roadblocks within each country, cross- border charges for trucks and weighing of transit vehicles on several points on highways. Kenya is grappling to reduce the number of its roadblocks from 36 to five and Tanzania from 30 to 15. Sub-Saharan Africa records an average port delay of 12 days compared to seven days in Latin America and less than four days in Europe. Africa is lagging behind!

In West Africa, Ghanaian exports to Nigeria are faced with informal payments and delays as the goods transit across the country borders whether there is proper documentation. In the Great Lakes Region, an exporter is faced with 17 agencies at the border between Rwanda and Democratic Republic of Congo each with a separate monetary charge sheet.

A South African retail chain Shoprite reportedly pays up to US$20 000 a week on permits to sell products in Zambia. Each Shoprite truck is accompanied with 1 600 documents in order to get its export loads across a Southern African Development Community border. Tariff and non-tariff barriers simply thicken the wall that traps Africans in economic poverty.

The new African Union chair should push for urgent steps to lower barriers to trade within Africa. Border control agencies need retraining and border country governments need to integrate their processes; long truck queues waiting to cross border points should not be used as an indicator of efficiency.

If it takes a loaded truck one hour to cover 100 kilometres; a four-hour wait at the border increases the distance to destination to another 400 kilometres. Increased distance impacts on the prices of goods at the retail end hence limiting access to products to majority of Africans. Limited access translates to less freedom of choice — similar to a locked up criminal prisoner.

With modern technology, goods should be declared at point of origin and point of receipt. Border points should simply have scanners to verify the content of containers. Protectionism, tariffs and non-tariff barriers within the continent sustains African market orientation towards former colonisers.

African entrepreneurs are subjected to longer travel schedules due to constant police checks and slow border processes. To fight poverty on the continent, African people would benefit from an African Union Summit that resolves to facilitate efficiency in movement of goods and services. Efficient delivery systems on the continent will tackle challenges of food insecurity, poor health care, conflicts and further promote diversified economies arising from competitive healthy trading amongst and between African nations.

Elimination of tariff and non-tariff barriers to trade will provide an opportunity for African entrepreneurs to adequately take their rightful places as relevant players in the global trade system. It is imperative that African countries re-orient their strategies to promote productivity by reviewing tariffs that hold back entrepreneurs from accessing the continent’s market. This calls for both a competitive spirit and a sense of integrated tariff and process compromise if the continent is to haul its population from poverty. Source: The Herald (Zimbabwe)

Related articles
by Mike Poverello

Mozambique – New customs transit regulation

FTWOnline has published a letter it received from the CEO of Maputo Corridor Logistics Initiative (MCLI), the interim-CEO of Maputo Port Development Company (MPDC). Seems like an important ‘heads-up’ for all logistics operators. It reads as follows –

“The hardly-negotiated Mozambique customs transit regulation is concluded and the document sent to the minister of finance for approval. Approval and official gazetting is expected for the first week of August.

“Key features are:

  • All the unknown costs are replaced by a transit fee of 500.00-mts (+\- 18 US$) for general cargo and 10 cents of mts (0.036 US$) per for bulk cargo.Art. 13.
  • It is clarified that transit cargo is duty-free and subject to a guarantee that can be isolated (for a single transaction) or global (for transactions etween 3-month and 1-year). The bond covers only the duties and taxes at risk and is capped at 35% of duties and taxes. As an example, if the value of the good is US$1 000, the bond will be equal to 35% of 22% (7% of duties and 17% of vat), totaling around US$75. The bond is calculated on the basis of the value of transactions undertaken in the preceding year. Art. 14 to 19.
  • Transhipment is free-of-bond and the acquittal takes place only in the last port in the national territory. Art.23.
  • Acquittal period for areas where the single window is not yet in place is of 5 business days.”
Related articles
by Mike Poverello

South Africa – Stalling Regional Integration

Yes, you’ll be forgiven if you thought this was some belated April-fools joke. South Africa has been accused of frustrating plans to create a regional customs union and instead preferring to bolster the South African Customs Union (Sacu), where it holds sway. 

A customs union is a trade agreement by which a group of countries charge a common set of tariffs to the rest of the world, while granting free trade among members. Regional Integration minister, Priscilla Misihairabwi-Mushonga, said there was a feeling that South Africa wanted to use Sacu as its basis to form a regional customs union, instead of working towards creating a new one.

“What we see is that South Africa wants to use Sacu as the basis for forming a regional customs union and sometimes, this is viewed as having a big brother mentality,” she said. Misihairabwi-Mushonga said, for this reason, negotiations towards a holistic Southern African Customs Union (Sadc) had not gone very far. Botswana, Lesotho, Namibia, Swaziland and South Africa make up Sacu, with the four countries having benefited by aligning themselves to South Africa, Africa’s largest economy. A Sadc customs union would involve the 15 countries of the region, instead of Sacu, which is considered narrow.

But Catherine Grant, the head of economic diplomacy at the South African Institute of International Affairs, reckons the smaller nations in Sacu, like Lesotho, may be opposed to Sacu morphing into a regional customs union. “This will be opposed by other Sacu members, not necessarily just South Africa, as this (Sacu) is not just a trade agreement, but involves a broader range of economic issues,” she said.

“Up to 60% of the Lesotho budget is Sacu revenue, so the vested issues, whether Sacu is the basis of a customs union, are not just South African.” Grant felt that it was impossible to expand Sacu in its current form, as it would cost South Africa too much and would dilute the resources that were meant for other projects.

The head of the trade and policy think-tank said instead, South Africa preferred to see the implementation of a free trade area (FTA) as a first step, since customs union negotiations were usually lengthy and time-consuming. “The preference is to first channel scarce resources to existing commitments and trying to make them as beneficial as possible,” she explained.

Grant said while South Africa was the dominant player in the region, hence engendering a feeling that it was imposing itself as the big brother, the country was actually holding back from taking a leading role and this cost the region.

“Sometimes South Africa holds back because they are conscious of not being a big brother and that could be detrimental to the region,” she explained. However, Grant said energies should be directed towards the conclusion of negotiations to set up the Tripartite Free Trade Area (TFTA), which includes the Common Market for East and Southern Africa, the East African Community and Sadc.

“The TFTA will resolve some of the overlapping issues that can be difficult to solve when it comes to a customs union,” she said. Since Zimbabwe adopted multicurrencies in 2009, there has been a call that the nation either join Sacu or push for the formation of a regional customs union. Zimbabwe remains wary of joining Sacu, as it fears for its economic independence, yet negotiations for a regional customs union are moving at a snail’s pace.

Sacu was established in 1910, making it the world’s oldest customs union. It consists of Botswana, Lesotho, Namibia, South Africa and Swaziland. Source: AllAfrica.com

Related articles
by Mike Poverello

ZIMRA, Business to form Customs Forum

The Zimbabwe Revenue Authority (ZIMRA) is working in partnership with organised businesses associations in crafting a Memorandum of Understanding, creating the Zimbabwe Customs to Business Forum, an official has said. ZIMRA’s commissioner for customs and excise Mr Happias Kuzvinzwa said last week that the forum was a platform for his organisation and business to collaborate on issues of compliance, policy, capacity building, integrity and technical engagements. He was addressing delegates at the Shipping and Forwarding Agents’ Association of Zimbabwe 8th annual conference held in Beitbridge last week. Mr Kuzvinzwa said the interim steering committee was finalising the draft MoU and terms of reference.

“The forum is a prelude to the implementation of the authorised economic operator scheme. Membership of this forum is open to the businesses affiliated to recognised associations and shall be governed through a steering committee which is a higher committee, and standing committees which are lower committees chaired and constituted by both ZIMRA and business.

“The standing committees are organised in clusters for easy management of programmes. We expect all the concerned parties to sign the MoU soon upon its finalisation” he said.

Mr Kuzvinzwa added that in line with the SAFE framework of standards, ZIMRA would soon be plotting the authorised economic operators. He said the scheme sought to reward all compliant operators in the supply chain who meet the set criteria. He added that groundwork had been done and teams will be conducting stakeholder consultations and awareness workshops next month. “I would also want to urge the freight industry to embrace as a culture and operation ethos integrity, voluntary compliance, relevant competencies, and information technology.

“Missing these industry risks is being packed into the dustbin of history as you become irrelevant and classified as non-tariff barriers.” he said. Mr Kuzvinzwa added that ZIMRA was also in the process of putting in place a border agency single window through ASYCUDAworld. He said all border agencies would be connected to the workflow process through ASYCUDAworld to ensure that respective mandates are coordinated and streamlined.

“Discussions are at an advanced stage with other border agencies on the implementation of the single window and Beitbridge has been selected to pilot the programme with ZIMRA providing computer workstations at their respective offices,” he said.

Source: The Herald (Zimbabwe)

Related articles
by Mike Poverello

Open Borders and Integrated Supply Chains break down Global Trade Barriers

East Asian economies have recorded marked improvements in their ability to enable trade, while traditional frontrunners Singapore and Hong Kong retain a clear lead at the top of the global rankings, according to the Global Enabling Trade Report 2012, released today by the World Economic Forum.

The report, which is published every two years, also confirms strong showings for Europe’s major economies, with Finland and the United Kingdom both advancing six places to 6th and 11th, respectively, and Germany and France remaining stable at 13th and 20. Other large economies fare less well: the US continues its decline to 23rd, as does China (56th) and India (100th). Among emerging economies, Turkey (62nd) and Mexico (65th) remain stable while Chile (14th), Saudi Arabia (27th) and South Africa (63rd) climb in the ranking. ASEAN members Thailand (57th), Indonesia (58th) and the Philippines (72nd) also improve. Perhaps the proponents of OSBPs and a BMA in South Africa have not read this or have deeper insight into the matter.

As well as ranking nations’ trade openness, the report finds that traditional notions of trade are increasingly outdated as global value chains require new measurements, policies and cooperation. The report also finds that security, quality and trade can be mutually reinforcing through supply chain integrity efforts, but a knowledge gap in identifying buyers remains an important barrier. The biennial report, covering 132 economies worldwide, measures the abilities of economies to enable trade and highlights areas where improvements are most needed. A widely used reference, it helps countries integrate global value chains and companies with their investment decisions.

At the core of the report is the Enabling Trade Index, which measures institutions, policies and services facilitating the free flow of goods over borders and to destination. It breaks the enablers into four issue areas: market access, border administration, transport and communications infrastructure, and business environment. The Index uses a combination of data from publicly available sources, as well as the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of partner research institutes and business organizations in the countries included in the report. The 2012 results demonstrate that the ASEAN Trade in Goods Agreement has facilitated trade since its entry into force in 2010. This year, the report also directly captures the most important obstacles to exporting and importing in each country, and notes the strong links between import and export success. Source: AllAfrica.com / WEF

Related articles
by Mike Poverello

Enhancing South Africa’s and Africa’s development through Regional and Continental Integration

Hardly a week goes by without some or other African politician waxing lyrical about continental integration, continental trade diversification, and a wholesome analysis of the ‘barriers’ which prevent the African continent  from reaching its full economic potential. No doubt I’m a bit biased in relaying the recent ‘public lecture’ of our deputy President Kgalema Motlanthe at the University of Finland – read the full speech here! Plenty of insight clearly delineating a plethora of barriers; yet, are we African’s so naive not to have identified these barriers before? Evidently yes.

In recent weeks, on the local front, we have learnt that One Stop Border Posts (OSBPs) is the solution to non-tariff barriers. This topic was drilled amongst the press till it got boring. The focus soon thereafter shifted to the implementation of a border management agency (BMA) – all of government under one roof – so simple. The reality is that there is no silver-bullet solution to African continental integration. Of this, affected business, Customs administrations and the international donor community is acutely aware. While the WTO and the multitude of trade lawyers will ‘yadder’ on about ‘diversification’ in trade, the reality is that Africa’s raw materials are even more sought after today than at an any time before. Certainly those countries which contain vast resources of oil and strategic minerals are about to reap the benefits. So why would African countries be concerned about diversification when the petro-dollars are rolling in? Perhaps greed or lack of foresight for the medium to long-term well-being of countries and their citizens? The fact remains, without homegrown industries producing goods from raw materials, most of  Africa’s eligible working class will continue to be employed by foreign mineral moguls or the public service.

Several customs and infrastructure solutions have over the last few years emerged with the usual credential of “WCO or WTO compliant”. Africa has been a guinea pig for many of these solutions – ‘experiments’ if you prefer. Literally millions of dollars are being spent every year trying out so-called ‘best-of-breed’ technology which users unfortunately accept without much questioning. The cart is being placed before the horse. Why? because the underlying route cause/s are not being identified, understood (sufficiently) and prioritized. Insofar as there exists no silver bullet solution, neither is there a single route cause in most cases. Unfortunately, donor aid often comes with its own pre-conceived outcomes which don’t necessarily tie in with those of the target country or the well-being of the continent.

While governments like to tout the ‘big-hitting’ projects, there are several ‘less exciting’ (technical) areas which countries can address to kick-start the process. One of these has even been recognised by the likes of the World Bank and OECD notwithstanding capital-intensive programs which promised much and have not delivered fully on their promise.  The issue at hand is the harmonisation of customs data. It might at first sound irrelevant or trivial, yet it is the key enabler for most Customs Modernisation initiatives. While there is still much anticipation in regard to the forthcoming deliberation and outcome of the WCO’s Globally Networked Customs (GNC) initiative at June’s WCO Policy Commission session in Brussels, there is significant support for this approach on the African continent. The momentum needs to be maintained.

 Related articles
by Mike Poverello

Hong Kong Customs Moves Forward With E-Lock Plans

The Hong Kong Customs and Excise Department (C&ED) reports that RFID-based container locks can effectively improve the security, convenience and visibility of the customs process for cargo entering the airport. In November 2011, C&ED began testing three types of electronic locks (e-locks) in order to speed up the process of performing customs checks on containers filled with cargo. The solution, known as the Intermodal Transhipment Facilitation Scheme (ITFS), was implemented as a way to streamline the clearance of cargo passing through customs at Hong Kong International Airport for cargo destined for areas both domestic and outside of Hong Kong. The installation and consulting services were provided by the Hong Kong R&D Center for Logistics and Supply Chain Management Enabling Technologies (LSCM), according to Frank Tong, LSCM’s director of research and technology development.

An electronic lock with an active RFID tag is being used to secure freight passing through
customs and Hong Kong International Airport, ensuring that the cargo remains tamper-free,
while also expediting the clearance process.

The Hong Kong C&ED estimates that the system reduces the amount of time required for clearing each container through customs, from two to three hours down to five minutes, since customs officials can now be assured that the containers have not been opened between their inspection at the border control point and their arrival at the airport. What’s more, the agency can now collect a digital record of where each container has been, along with when it was inspected.

Cargo is loaded into freight containers or directly onto trucks—such as those operated by United Parcel Service (UPS)—in Mainland China, and is then transported to a customs control point located at the border with Hong Kong, where C&ED officials inspect the cargo and clear it for entry into Hong Kong. Following that clearance, the shipment continues on to Hong Kong International Airport’s cargo terminal, where the goods are unloaded from the container or vehicle, and are placed into an air cargo container. Once this has occurred, the cargo is moved through another customs control point at the airport, where C&ED again inspects and approves or rejects its passage.

To speed up this process, the R&D Center implemented the use of an e-lock for the customs agency, consisting of a physical lock activated by a built-in active RFID tag, designed to receive a transmission from an RFID reader that allows the lock to be opened or closed. Three types of e-locks are currently being used, provided by three different vendors: Long Sun Logistics Development Ltd, CIMC Intelligent Technology Co. and CelluWare Research Laboratory. Each of the three products employs a different frequency—433 MHz, 315 MHz and 2.4 GHz—but all comply with the ISO 17712 standard for mechanical seals designed for freight containers.

LSCM has installed fixed RFID readers (provided by the three e-lock vendors) at two border control points—Lok Ma Chau and Shenzhen Bay—as well as at Hong Kong International Airport. When a shipment first arrives at either border control point, C&ED’s staff attaches an e-lock, reads the ID number encoded on its built-in RFID tag via a handheld reader, and links that ID with the vehicle registration number of the truck transporting the container. The transporting company must pre-register each vehicle with the Hong Kong C&ED prior to its arrival; the truck’s ID number is listed in the agency’s database, and the customs official can confirm that the vehicle is, in fact, the one expected.

That data, along with the specific cargo being transported, is then stored on the Hong Kong C&ED’s integrated tracking software platform, developed by LSCM, which collects and processes the data and then displays it for customs officials when necessary. The system stores the e-lock ID number linked to the vehicle ID, and transmits instructions to the e-lock, along with a password, thereby causing it to lock. The device also requires a physical key, which remains in the driver’s possession. In this way, two actions must be completed before the container or vehicle can be unlocked: The e-lock must be electronically unlocked via a password from a customs official, and the driver must use a key to physically open the padlock.

The shipment is then transported approximately 42 kilometers (26 miles) to the airport. The e-lock comes with a built-in GPS device that tracks the vehicle’s location as it moves. In that way, the e-lock stores a record of where the vehicle has been. When the lock is later read at the airport, the back-end software compares the actual GPS data against the container’s expected route. The system can issue alerts in circumstances in which an e-lock is found to have lost a GPS signal, or, based on GPS data, the truck appears to have deviated from the intended route.

At Hong Kong International Airport, a C&ED official either selects the container for inspection, or simply instructs the system to issue an unlocking command with the matching password; the container is then brought to a site where the cargo is removed and then loaded onto an aircraft, says Steve Wai-chiu Chan, a C&ED special duties officer. If the container is selected for inspection, the e-lock remains locked. In this scenario, a truck driver would be instructed to await a C&ED officer, and would be unable to unlock the container without providing the proper password. The C&ED officer, upon arrival, would then use a handheld device to read the e-lock, instructing it to unlock by providing the necessary password.

LSCM installed a total of 38 readers at the two land border control points, five logistic hubs at the airport and a marine control point known as the Kwai Chung Customhouse, for items arriving by sea (at the Marine Cargo Terminal located at the airport). Altogether, by February of this year, 109 containers had been equipped with the e-lock device. An average of 100,000 consignments pass through the border daily, and the ITFS e-lock system is utilized for about 17 percent of that cargo.

The solution has enabled a faster customs clearance process, as well as providing a digital record of what was unlocked, and thus inspected, and when this occurred. The system also improves security, since only officers who know the proper password can access the container. Ultimately, Chan says, “it enhances the Hong Kong logistic industry’s competency and reinforces Hong Kong’s position as a world-class logistics hub.” Source: RFID Journal and a word of thanks to Andy Brown (Tenacent) for bringing the article to my attention.