October 30, 2012November 9, 2012 by Mike Poverello

Nigeria Customs – Exiting the era of ‘contracted services’

Goodluck Jonathan addressing the WCO in June 2012

As the Nigeria Customs Service (NCS) gets set to assume all hitherto contracted services from the service providers come December 31, 2012, kudos must be given to the administration of President Goodluck Jonathan for the political will which has brought this to fruition. This is a highly significant development that should encourage other African nations to follow suit.

Over the years, the functions of the Customs administrations have evolved from revenue collection to include protection of industries, protection of citizens, trade facilitation as well as trade security and environmental issues and Customs administrations have continued to improve with the dynamism brought about by the evolving global world.

Therefore, if any country must rely on contracting core Customs services to private companies, then such a country should as well disband its Customs administration. What this means is that no one can ‘Captain’ a ship better than a ‘Captain’, even the best pilot in the world would fail woefully when saddled with sailing a ship.

This is because, whilst it is necessary to contract some of these services to the private sector, such services are usually treated by benefiting firms as mere business ventures and as such, create a situation where governments use such contracts to benefit close allies, even as organisations will go to the extremes to secure such contracts, primarily for profit making.

Having critically studied the scenario, the World Customs Organisation (WCO), summed up that such practice usually results in a situation where there will be no trust in the Customs frontline and post clearance capability. This has prompted the Organisation to, in recent years, develop several diagnostic studies and programmes aimed at championing broader international Customs capability with high benefits to governments of its member countries.

Findings have however, shown that governments may choose the private-sector to complement its resources and capabilities in which supporting operations ranging from printing Customs legislation and tariff to designing Customs websites, repairing and maintaining facilities and equipment and conducting research into specific topics may be outsourced to private companies.

Core Customs responsibilities were also, through contracts with a government, outsourced to private companies that conduct pre-shipment Inspection (PSI) or Destination Inspection (DI) activities. As their names suggest, PSI activities are conducted in exporting countries in order to verify the quality, quantity, price and classification of such exported goods, while DI activities are carried out in combination with scanning technology on imported goods in importing countries.

However, this option, according to the world Customs body, has been observed to be usually more cost effective than in-house operations for many reasons including the stimulation provided by competition in the private sector.

It is therefore time that such organisations which front themselves with the ‘be all’ systems in Customs tariff and valuation appraisal rather seek a more practical and benefit-delivering model than one which not only scams governments of service and inspection fees, but also offers no benefit to trade.

Some of them offer government free cargo scanning equipment in exchange for a lucrative inspection fee. None of this is based on risk management and mostly purely profit focussed. The concept forgoes most, if not all the modern Customs principles and standards promoted by the WCO.

Rather than this concept which adds no value to trade, the focus of government should be capacity building for Customs officers; and with a commitment to capacity building under the Dikko-led management, the NCS now has capable hands to take-over the running of all its functions, and thereby retaining capital flight.

It is worthy to note that PSI and DI is normally introduced to enhance Customs functions as a stop-gap measure while waiting for Customs reforms and modernisation.

According to the WTO, as at November 2011, at least 25 countries, most of which are in sub-Sahara Africa, had contracts with private inspection entities for PSI and DI of which Nigeria was one of them, but this would no longer be after 31st December, 2012, when Nigeria would exit from that category.

Furthermore, it is also important to note that the WCO position is that such contracted core Customs services should not be considered as a permanent substitute for the Customs administration, but only as a temporary measure.

As a consequence of critical assessments of the performance of inspection companies and inefficient capacity-building and training activities, many Customs administrations have exited these outsourcing contracts and the WCO, with its accumulated knowledge, is able to assist its members with the process of discontinuing these contracts.

Nonetheless, there are certain circumstances where the hiring of inspection companies could be justified because of lack of expertise as in the case of post-conflict reconstruction situation. However, in such cases, contracts with PSI, DI companies as service providers should be accompanied by an active exit plan strategy within the context of a capacity-building or Customs modernisation programme. Even the PSI companies are in this case, expected to work in compliance with the WTO agreement on PSI and relevant WTO’s recommendations.

When Abdullahi Dikko, on assumption of office as Comptroller-General of the Nigeria Customs Service in 2009, began a campaign for the modernisation of the NCS as captured in his six point agenda with more emphasis on capacity building and improved welfare, he was criticised for embarking on such a capital intensive venture by many, who then didn’t believe in his vision. But today, the result of the huge investment on capacity building is evident as the NCS, come December 31, 2012, would pride itself among the 21st century Customs administrations, measuring with its counterparts in developed countries, by taking over full control of all Customs operations.

There are arguments that the outsourcing of supporting functions to the private sector enables the Customs administration to focus their scarce resources on their functions, but this is no longer the case with the NCS.

Facts have shown a sharp rise in the resources of the Service due to an improved revenue collection. Monthly collection has risen from the inherited N30 billion to N90 billion. The increased revenue collection has made it possible for Customs officers to have a 100 per cent salary increase and even freeing more resources for the acquisition of quarters for officers and men, renovation of Customs barracks nationwide, provision of staff buses, uniforms and clinics in most commands.

This landmark achievements have been made successful with the full deployment of the NICIS platform for e-Customs declaration and processing, manifest submission, duty payment and final release. Records show that e-manifest processing which usually took seven days and above in 2009, is now been processed same day. Same goes for e-remittance processing. Same transformation has being noticed in the number of processed SGDs which has risen from an average of 367,897 in 2009 to about 526,604 currently.

Summarily, it must be noted that the scanning aspect of the Customs supply chain security paradigm contributed to the evolution from pre-shipment inspection to destination inspection. Traditionally, many developed countries, especially in Africa, employ companies from developed countries to do pre-shipment inspection of imports to Africa primarily for classification and valuation purposes.

The pressure to consider exports as well as imports and for national security contributed to the emergence of destination inspection companies, where the Customs controls are conducted in the African country. This has reduced the internal costs of such service companies and increased their incomes but has done little or nothing to reduce checks at the border or import points. Source: Leadership (Nigeria)

Nigerian Customs Boss unveils new scanners (mpoverello.com)
Ending Outsourcing of Customs Duties (Daily Trust – Nigeria)

October 7, 2012October 7, 2012 by Mike Poverello

Picard 2012 – with a South African perspective

Over 230 delegates representing WCO Members, the academic world, international organizations, the private sector, donor organizations and other interested parties attended the 7th WCO Conference on the Partnership in Customs Academic Research and Development (PICARD) hosted by the University of Cadi Ayyad in partnership with Morocco Customs and the WCO in Marrakesh, Morocco from 25-27 September 2012.

The Conference was co-chaired by Prof. Michael Wolffgang, University of Münster, and Prof. M’barek Benchanaa and Prof. Abdullah Ait Ouahman from the University of Cadi Ayyad. The Conference focused on three main topics: The Impact of Regional Economic Integration and Preferential Trade Arrangements on Customs Services; Emerging and Evolving Risks; and Customs Strategic Human Resource Management.

The WCO PICARD Programme was officially launched in 2006 to strengthen co-operation between the WCO, universities, and Customs human resources entities such as Customs Academies. The programme’s objective is to provide a platform where stakeholders can co-operate, collaborate, and contribute to two main pillars: (1) Customs professionalism and (2) Customs-related research.

Key PICARD achievements include adopting the PICARD Professional Standards for operational and strategic Customs managers; holding six successful PICARD Conferences; and publishing many Customs-related research papers in the World Customs Journal. Moreover, a growing number of universities have obtained WCO recognition of their Customs-related academic curriculums.

The PICARD Conference has become an annual meeting place for Customs officers, Customs human resource professionals, and academics to network and exchange ideas on Customs professionalism and Customs-related research. It is an opportunity for Customs academies and the WCO Regional Training Centres to glean new ideas on human resource development. At each conference, research papers are presented; this year, papers will be presented on regional economic integration, emerging and evolving risks, and human resource management.

The dearth in Customs expertise has become an international phenomenon, and South Africa is no exception. Locally based training organisation, GMLS, has been working with the University of Kwazulu Natal, Durban and UCT in Cape Town and in Durban specifically it is expected after council of Higher education approval next year that we will be offering a full masters Degree in Customs for the first time in South Africa as a MCom Customs and Excise, says GMLS CEO Mark Goodger. GMLS is a WCO E learning trainer, an ICC accredited trainer and an approved TETA (Transport Education Training Authority Trainer).

Mark was invited as a guest speaker to this year’s Picard Conference. He explained that the WCO arranged presentations to stimulate discussions and guidance required from the WCO in the future. Along with South Africa, presentations were also delivered by Finland, Canadian and Moroccan Customs training experts in the results of research and the status in SADC countries of recognised accredited training frameworks which can be utilized by Customs worldwide. Whilst Customs administrations are implementing the Revised Kyoto Convention and the SAFE Framework it is clear that trade will need to follow the direction of future compliance as Customs leads forward into the 21st century.

WCO lauds NZ Customs for its capacity building assistance (mpoverello.com)

October 1, 2012 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

Regional IT inter-connectivity takes another step (mpoverello.com)
Thick Borders – Thin Trade (mpoverello.com)

September 16, 2012September 16, 2012 by Mike Poverello

Nigerian Customs Boss unveils new scanners

The Comptroller General, Nigerian Customs Service (NCS), Alhaji Inde Dikko Abdullahi, said that ports users would henceforth complete their business transactions within 24 hours. Speaking at the formal unveiling of the gantry scanner procured by Societe Generele Surveillance (SGS) Nigeria at Onne, Eleme Local Government Area, Rivers State, he said the new scanning facilities would boost the 48-hour target for clearance of goods at the ports, noting that it would complement government’s efforts toward reducing the cost of doing business at the ports.

Special training for a select team of 80 NCS officers has been concluded. The team is expected to take over services and operations in the Destination Inspection scheme as from January 1, 2013. The training covered all aspects of the DI activities being handled by SGS for NCS with emphasis on actual risk analysis and processing of the importer’s final document resulting in classification and valuation opinion.

Managing Director of SGS Scanning Nigeria Limited, Mr. Nigel Balchin, in his address at the occasion, said the mobile cargo scanners were capable of scanning about 34 trucks per hour as against 16 per hour by the fixed cargo scanners. Each had double tunnel that enabled it scan two trucks at the same time with equal image quality as the fixed scanner. “At SGS we are committed to quality service delivery. We are very glad to be part of this success story and we look forward to Nigeria Customs Service taking charge of the DI programme. The knowledge you have acquired is for the benefit of Nigeria Customs Service and ultimately that of the Nigerian economy. We wish you the best in your future endeavours”, he said.

The image quality of the relocatable gantry scanners is on par with a fixed scanner. Trucks remain stationary during scanning (the scanner moves on rails) unlike a fixed scanner where the truck is pulled through the scanner on a conveyor that’s more vulnerable to maintenance issues. The scanner is mounted above ground unlike a fixed scanner where one of the detectors is four metres underground. In addition, a relocatable gantry scanner can be re-deployed to an alternative site, in a relatively short time, in case of any expansion or new development.

SGS is one of the service providers contracted by the Federal Government to assist the NCS facilitate trade through risk management and use of non-intrusive inspection (x-ray cargo scanning) of imports routed through the nation’s air and sea ports as well as approved borders. The company is currently providing cargo scanning services in Bahrain, Cameroon, Haiti, Madagascar, Uruguay and has completed provision of scanning services in Gambia, Kosovo and Mexico. Source: Leadership.ng

More than finger-licking good: Nigeria finds $150,000 worth of cocaine in roasted chickens (theprovince.com)

July 31, 2012July 31, 2012 by Mike Poverello

US Customs – $100 million customs fraud uncovered

The article below has been doing the rounds over various social media the last few days. The ‘standout’ issue for me is the fact that such an alleged crime occurred in the USA. With the focus of the customs world nowadays so much on the anti-terror campaign, could it be that one of the single biggest enforcement agencies in the world is not as sharp on traditional customs fraud activities? With the boundless focus on ‘safety and security’ it often seems as though the traditional customs crimes have given way to ‘globally networked syndicates’ using every means of technology to by-pass sovereign authorities. Yet, when you read the brief below, it all boils down to the human factor. To what extent the outcome of this case will attest to the Customs and Border Protection Agency’s risk management capability and moreover the extent to which such campaigns as CT-PAT really give the agency the edge in better ‘knowing’ its customers remains to be seen. A successful border agency must still do the basic things right, as dated as they may seem in the modern world. This case therefore proves how important it is for any national customs and border management agencies to invest in customs-skills training with lesser emphasis on the technology side of things. It is so unfortunate that most countries see Customs Capacity Building as an investment in technology. At this rate with no investment in customs technique, who is going to be able to properly interpret risk indicators if all the agency employs are statisticians and university post-graduates?

SAN DIEGO, CA – A complaint charging eight individuals and three corporations with operating a ring that illegally imported hundreds of millions of dollars in foreign goods into the United States though the Long Beach Port-of-Entry and evaded millions of dollars in import taxes was unsealed today, announced United States Attorney for the Southern District of California Laura E. Duffy.

According to the complaint, the defendants’ scheme focused on purchasing large, commercial quantities of foreign-made goods and importing them without paying import taxes or A Customs duties. As alleged in the charging documents, wholesalers in the United States would procure commercial shipments of, among other things, Chinese-made apparel and Indian-made cigarettes, and arrange for them to be shipped by ocean container to the Port of Long Beach, California. Before the goods entered States, the defendants generated paperwork and database entries indicating that the goods were not intended to enter the commerce of the United States, but instead would be transshipped “in-bond” to another country, such as Mexico.

As noted in the complaint, this in-bond process is a routine feature of international trade. Goods that travel in-bond through the territory of the United States do not formally enter the commerce of the United States, and so are not subject to Customs duties.By claiming that the goods would be transshipped in-bond to another country, the defendants falsely represented that no Customs duties applied.

According to the complaint, instead of completing the in-bond transshipment, the defendants would hire truck drivers to haul the shipments to warehouses throughout Southern California. After generating the false paperwork and database entries, the goods would then be diverted back to Los Angeles and other destinations for shipment throughout the United States. As the conspirators had now effectively imported the goods tax-free, they could in turn sell more merchandise at cheaper prices and reap greater profits than their law-abiding competitors, including domestic American manufacturers of the same goods.

The complaint alleges that in addition to harming lawful domestic businesses, the defendants deprived the United States of the Customs duties that it was owed on these diverted shipments. To date, the government has already identified more than 90 commercial shipments of Chinese-made apparel, foreign-made cigarettes and other goods that were illegally imported in this manner. Altogether, these shipments were worth at least $100 million and resulted in more than $10 million in lost Customs duties, taxes and other revenue.

According to United States Attorney Duffy, “The charges announced today underscores our commitment to ensure that no one exploits the import process for personal gain. Not only does such illegal conduct present a significant danger to the American people, but it deprives law-abiding companies of a level playing field resulting in the potential loss ofbillions of dollars in revenue.”

“This investigation pulled back the curtain on a potentially costly fraud scheme operating in one of the world’sbusiest commercial centers,” said ICE Director John Morton. “Instead, HSI, aided by our law enforcement partners, exposed and dismantled this criminal ring and now those responsible will be held accountable.”
“Every day, U.S. Customs and Border Protection officials work to protect the U.S. and interdict fraudulent goods from entering the country. I commend the work of our officers for their instinct and diligence, and recognize the seamless coordination across government agencies,” said David V. Aguilar, Acting Commissioner, U.S. Customs and Border Protection. “Joint efforts such as this are crucial to maintaining our nation’seconomic security and competitiveness.”

“The FDA-Office of Criminal Investigations is fully committed to investigating and supporting the prosecution of those who may endanger the public’s health and safety by importing unsafe and potentially life-threatening products. We commend the U.S.Attorney’s Office in the Southern District of California for their diligence,”said Lisa Malinowski, Acting Special Agent in Charge, U.S. Food and Drug Administration’s Office of Criminal Investigations, Los Angeles Field Office. As alleged in the complaint,defendant Gerardo Chavez is President of the San Diego Customs Brokers Association and a licensed Customs broker. Using his Customs license, Chavez, his employees and his companies—including defendants Tecate Logistics, LLC and International Trade Consultants, LLC—generated the fraudulent Customs paperwork that was integral to the scheme. Similarly, Chavez and his companies would make false entries into Customs databases, in order to create the false appearance that in-bond shipments of foreign-made goods had been lawfully transshipped to Mexico. As part of this effort, Chavez, Joel Varela and others would also forge official Customs markings to make it appear as if a United States Customs official had certified various shipments as having been transshipped to Mexico.

Charging documents also allege that Chavez had several dedicated customers who were part of the conspiracy. For example, defendant Sunil Mirwani, a citizen of the United Kingdom, received dozens of shipments of illegally imported Chinese-made apparel at warehouses throughout the Los Angeles area. Mirwani marketed and sold the apparel using hiscompany, defendant M Trade Inc. Similarly, defendant Rene Trahin and other co-conspirators distributed various shipments of illegally imported “gray market” cigarettes ranging from Indian-made to German-made brands to warehouses, self-storage areas and a residence in San Diego, Los Angeles and parts between.

The complaint alleges that the defendants also imported produce infected by Salmonella Agona. Often called simply “Salmonella,” this pathogen is a potentially life-threatening infectious bacteria. On one occasion, after a shipment of nopal cactus (also known as prickly pear) tested positive for Salmonella,co-conspirator changed the description of the nopal cactus’ grower for subsequent shipments, for the purpose of evading future Food and Drug Administration (“FDA”) inspections. Similarly, defendant Elizabeth Sandoval and Varela conspired to import Mexican snack foods that were mislabeled and adulterated with a prohibited dye. The remaining defendants named in the complaint are employees and agents of Customs brokers, wholesalers and transport companies who are alleged to have knowingly aided the conspiracy.

This case is being prosecuted in federal court in San Diego by Assistant United States Attorney Timothy C. Perry and is being investigated by the Department of Homeland Security, Immigration and Customs Enforcement Homeland Security Investigations, and United States Customs and Border Protection, the Internal Revenue Service, the Food and Drug Administration, and the Alcohol and Tobacco Tax and Trade Bureau. A complaint is a formal charging document and defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt. Source: US Department of Justice

July 24, 2012 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

South African Customs hindering smooth operations (gabzfmnews.wordpress.com)
Massively ambitious plan for economic integration in Africa (kariobangi.wordpress.com)
2013 SACU receipts expected to fall – EU (observer.org.sz)

June 17, 2012June 17, 2012 by Mike Poverello

News from Angola

SEZ for Cunene Province

The government of Cunene province in southern Angola, has chosen the border town of Calueque, in Ombadja municipality, to set up the province’s Special Economic Zone (ZEE), the province’s governor, António Didalelwa said in Ondjiva speaking to Angolan news agency Angop. At the end of a meeting of the provincial government, the governor said that Calueque had been chosen due to its potential to drive agri-livestock activities based on the Cunene River’s hyrodgraphic basin and the Calueque hydroelectric facility. Its proximity to Namibia, its conditions in terms of available electricity and water, as well as access roads make it possible to set up economic and administrative facilities in order to drive production and job creation. The entities that attended the provincial government meeting concluded that the existing conditions at the new ZEE would attract investments and drive production by installing factories, retail and services areas. This follows last year’s fomalisation of the Luanda-Bengo Special Economic Zone (SEZ) between the towns of Viana and Cacuaco in Luanda province and the towns of Icolo-e-Bengo, Dande, Ambriz and Namboangongo in Bengo province. Watch a short video on the Luanda-Bengo ZEE here! Source: Macauhub.com.

Customs Modernisation

The Programme to Expand and Modernise Customs Services (PEMA) in Angola, which began in 2002 and officially ended Monday 21 May, cost US$315.5 million, Angolan weekly newspaper Expansão reported. The newspaper added that in a 10-year period the PEMA had led to US$17.7 billion going to the State’s coffers and thus the cost of the programme was just 1.8 percent of the revenues that it had made possible.

During the ceremony to mark the end of a partnership with Crown Agents, a UK company that specialises in modernising public services, the assistant director general of the National Customs Service, Maria da Conceição Matos, said that whilst the programme was being implemented customs revenues had increased steadily and significantly. Matos said that the Programme for Expansion and Modernisation of Customs Services had reformed the institution structurally across the whole of Angola, based on international best practices for the customs sector.Source: Macauhub.com.

June 10, 2012 by Mike Poverello

Multimodal inland hubs to add to Gauteng’s container capacity

Engineering News reports that Gauteng will require additional container terminal capacity by 2016, when City Deep, in Johannesburg, will reach its full capacity. Container movements to the province was projected to grow to over three-million twenty-foot equivalent units (TEUs) a year by 2020, she said in her Budget Vote address at the Gauteng Provincial Legislature. Gauteng’s intermodal capacity currently stood at 650 000 TEUs a year and comprised the Pretcon, Vaalcon, Kascon and City Deep hubs.

Gauteng MEC for Economic Development, Qedani Mahlangu said the next generation of inland hubs would create an integrated multimodal logistics capability connecting air, road, rail and sea. Tambo Springs and Sentrarand, in Ekurhuleni, were identified to be developed into the new improved hubs.

By 2018, Tambo Springs would handle 500 000 TEUs and will focus on economic development and job creation, among others. “Tambo Springs will serve as an incubator to stimulate the establishment and growth of new ventures, create opportunities for small, medium-sized and micro enterprises and create 150 000 new jobs,” Mahlangu said.

She added that the department was working towards reaching an agreement with State-owned Transnet in September so that funding could be committed to start implementation by June 2013, for the first phase, which would comprise the railway arrival and departure terminal, to be completed by March 2014.

As per the Gauteng Employment, Growth and Development Strategy, freight and logistics were key drivers in stimulating sustainable growth in the province and the country. “Logistics efficiency will have positive spin-offs to the country‘s ability to export and import goods. In terms of freight, the intention is to move to rail… thereby reducing congestion on roads, air pollution and the impact on the surface of roads. The overall objective is to optimise Gauteng as the gateway to the emerging African market,” Mahlangu said. Source: Engineeringnews.co.za

New Durban dug-out Port – tenders released (mpoverello.com)
11,660-TEU container ship due in Durban (shippingnewsandviews.wordpress.com)

June 4, 2012 by Mike Poverello

New Issue of the World Customs Journal

The latest edition of the World Customs Journal (March 2012) comprises what appears to be a disparate array of topics. Professor David Widdowson invites your attention to the underlying theme of contrasting approaches to universal imperatives which permeates several of the contributions, which includes, for example,

a comparative analysis of excise taxation across the ASEAN region and identifies the need for standardisation in readiness for the impending introduction of the ASEAN Economic Community. It’s nice, for a change to have articles which deal with Excise.
a research paper concerning the diversity of de minimis arrangements in the APEC region, highlighting their impact on economic benefits and costs.
a review of a variety of regional approaches to coordinated border management, and
the introduction of the EU’s electronic customs environment as a means of achieving regional standardisation.

The underlying commonality of border management imperatives is also reflected in this edition’s Special Report. In his insightful article ‘Lines and Flows: the Beginning and End of Borders’ Alan Bersin (former Commissioner of the CBP) challenges the traditional concept of international borders, and introduces a paradigm that views global cooperation as a fundamental requirement for effective border management. The next edition of the Journal will focus on excise policy and practice, and will include papers presented at the World Customs Organization’s Global Excise Summit which will be held on 2-3 July at the WCO Headquarters in Brussels. Source: The World Customs Journal.

May 31, 2012May 31, 2012 by Mike Poverello

SEZ – Lessons for South Africa from international evidence and local experience

A bold paradigm shift in South Africa’s economic policy is required to ensure the success of the country’s new special economic zones (SEZs) programme, according to Centre for Development and Enterprise (CDE) executive director Ann Bernstein.At the launch of the new CDE report on SEZs, she explained that South Africa’s current economy favoured skill and capital-intensive industry, which was not making the cut in terms of job creation.

“South Africa needs to create the right kind of environment for the emergence of businesses that can employ large numbers of unskilled people. That is what we should use the SEZs to do.“This will require bold leadership and engagement with the difficult choices on labour costs and flexibility that must be made. The alternative is to waste resources and energy yet again on a policy that fails,” Bernstein urged.

The report, titled ‘Special Economic Zones: Lessons for South Africa from international evidence and local experience’ suggested that South Africa should establish at least two large SEZs that were focused on low-skill, labour-intensive industries such as the clothing and textile sectors and enable them to compete globally. “Without reform, the only way South African companies can compete with Chinese, Vietnamese and Indian companies is by mechanisation, which results in fewer people being employed, and a greater reliance on skills,” Bernstein pointed out. “International evidence shows that the most successful SEZs were public–private partnerships,” Bernstein noted. Further, the report showed, as recognised by government, that South Africa’s industrial development zones (IDZs) that include Coega, East London and Richards Bay, had largely failed to boost economic growth, create jobs, promote industrialisation or accelerate exports.

Bernstein attributed this to the lack of a clear definition for what these zones should entail, as well as a strategy for attracting investors. “The IDZs are basically just industrial parks – it’s no wonder they have not been successful in attracting new investors and creating jobs.” Although the Department of Trade and Industry (DTI) had spent R5.3-billion on developing these zones, the vast majority of the 33 000 jobs created were short-term construction jobs, with only 5 000 permanent jobs created.

Bernstein said countries such as China, Costa Rica, Mauritius and Latin America countries could be viewed as benchmarks for South Africa in terms of IDZs. Rising costs in Asia, especially China, where labour-intensive firms were looking for new regional locations, were creating opportunities for IDZs in South Africa. The CDE argued that South Africa should seize the opportunity to compete for a sizable portion of the jobs that could sprout from this.

“A bold new SEZ strategy could become a platform for new companies and new investors that use unskilled labour rather than machines,” Bernstein indicated. “South Africa’s new SEZ programme needs to be a presidential priority. The DTI needs to be fully supported by all other departments of government. Unless the whole of government gets behind the effort, we’re not going to see the kind of investor uptake that would actually make a difference,” CDE research and programme director Antony Altbeker said. Trade and Industry Minister Rob Davies is set to table the draft SEZ Bill in Parliament later this year, while Finance Minister Pravin Gordhan announced that R2.3-billion would be allocated to the establishment of SEZs were in the 2012/13 Budget.

However, the CDE’s report warned that the Bill provided no clarity about what would differentiate SEZs from industrial parks, its envisaged governance arrangements for SEZs was confusing and said the role of the private sector was unclear. Source: Engineering News

SEZ – requires a paradigm shift in government thinking (mpoverello.com)
Special Economic Zones – how special? (mpoverello.com)
Having difficulty understanding economic zones? (mpoverello.com)
Mafikeng IDZ fails! (mpoverello.com)

May 25, 2012May 25, 2012 by Mike Poverello

Africa – ready for rich pickings?

While on the theme of African economic and trade emancipation, it is interesting to consider the detailed analysis and evaluation occurring in regard to African continental readiness for information and communication technologies. One such study is the Transformation Ready or eTransform Africa programme, a joint programme of the African Development Bank and the World Bank, in partnership with the African Union. Bear in mind that the WCO and African Development Bank recently signed a cooperation agreement to enhance the capacity of Customs administrations in Africa.

The study (Click Here!) is a series of case studies of certain countries. The aim of the programme as a whole, as set out in the terms of reference, is to:

Take stock of emerging uses of ICT across sectors and of good practices in Africa and in other continents, including how ICTs are changing business models in strategic sectors.
Identify key ICT applications that have had significant impact in Africa or elsewhere and that have the potential of being scaled up, both from the public and private sectors.
Identify binding constraints that impact ICT adoption and scaling-up of effective models, such as the need to develop a regional culture of cyber security, and measures to address these constraints, including in relation to the role of different actors and stakeholders (private, public, development community, civil society, etc).
Commission a series of country case studies, to formulate a guide for rolling out and scaling up key applications in Africa, in each of the focus sectors, and thereby to identify opportunities for public/private partnership, as well as identifying areas where intervention can be reduced or eliminated.
Develop a common framework for providing support in ICT for development to countries that brings together the operations of the two Bank Groups and their respective departments.

The terms of reference for individual sectors were as follows:

Within each sector, identify specific opportunities and challenges in Africa that can possibly be addressed with an increased or better use of ICT. Constraints that are hindering ICT uptake and scale-up will be examined within the context of each sector/industry, including human capacity in IT skills and sustainable business models such as for public private partnerships (PPP). Further, the appropriate role of governments in the provision of priority ICT applications and services will be examined in order to maximize private sector development;
Undertake a quick scan of ICT applications in the different sectors and identify a few applications that have had significant impact in Africa or elsewhere and that have the potential of being scaled up. The scan should refer to a matrix of selection criteria on which to select case study countries that are considered ripe for the creation of public/private partnerships. On this basis, specific country case studies will be chosen – two to three per sector — on a representative basis, for deep dive analysis. The selection of case studies should be made in consultation with the partners and the other consultants. A workshop should be organized by the coordinator firm at an early stage in the project to finalise this selection.
Analyze and understand the barriers to the greater adoption and mainstreaming of ICTs. Barriers may include, for instance, low purchasing power, illiteracy, infrastructure constraints, lack of regulation, poorly functioning mobile ecosystem, power shortages, political instability etc. Identify cases/examples on how these have been dealt with;
Analyze and understand the enabling factors of success, including political economy, policy, institutional, human, financial and operational factors;
Consider the option of developing multi-country programs or special facilities that would allow fast-tracking specific programs across countries;
Provide guidelines on designing appropriate and sustainable ICT components for sector projects (including building effective public and private partnerships) and on evaluating the impact of these interventions; and
Propose a course of action on how to include ICT in policy dialogue and planning with country counterparts on sectoral development goals and priorities. Experiences and best practices from other regions will be drawn upon to define the role of the public sector, bearing in mind that government is increasingly positioned as a lead user of ICTs as well as a regulator of the sector.

The following article provides a disturbing – some would call it conspiracy theory – on what lies in store for the continent of Africa. Perhaps the colonial days will be viewed as mild should some of the suggested schemes materialise.

UN to Control World’s Information and Communications From Internet Hub in Africa (Axisoflogic.com)
African Bank and WCO create partnership to strengthen customs administrations (mpoverello.com)
Border Posts, Checkpoints and Intra-African Trade (mpoverello.com)
Enhancing South Africa’s and Africa’s development through Regional and Continental Integration (mpoverello.com)

May 25, 2012May 25, 2012 by Mike Poverello

Namibia buys into ‘Single Window’ concept

From April 12-13, Southern African Trade Hub (aka USAID) presented Single Window as a cutting-edge tool for trade facilitation to the Ministry of Industry and Trade, Ministry of Finance, Customs and other private sector organizations, explaining how a NSW for Namibia could improve the Trading Across Borders index ranking, which currently stands at 142 out of 183 countries. Single Window is a crucial instrument that will eliminate inefficiency and ineffectiveness in business and government procedures and document requirements along the international supply chain, reduce trade transaction costs, as well as improve border control, compliance, and security.

Benefits for Government: A Single Window will lead to a better combination of existing governmental systems and processes, while at the same time promoting a more open and facilitative approach to the way in which governments operate and communicate with business. Traders will submit all the required information and documents through a single entity, more effective systems will be established for a quicker and more accurate validation and distribution of this information to all relevant government agencies. This will also result in better coordination and cooperation between the Government and regulatory authorities involved in trade-related activities.

Benefits for trade: The main benefit for the trading community is that a Single Window will provide the trader with a single point for the one-time submission of all required information and documentation to all governmental agencies involved in export, import or transit procedures. As the Single Window enables governments to process submitted information, documents and fees both faster and more accurately, traders would benefit from faster clearance and release times, enabling them to speed up the supply chain. In addition, the improved transparency and increased predictability would further reduce the potential for corrupt behaviour from both the public and private sector.

If the Single Window functions as a focal point for the access to updated information on current trade rules, regulations and compliance requirements, it will lower the administrative costs of trade transactions and encourage greater trader compliance. The Permanent Secretary for the Ministry of Industry and Trade underscored the need for Namibia to proceed with the Single Window concept, and advised participants that his Ministry, together with the Ministry of Finance, would jointly package the Single Window concept and submit it to Cabinet for Government approval.

In Southern Africa, Mauritius already has an effective Single Window, which is reflected in its “Trading Across Borders” ranking of 21. Mozambique recently launched its pilot Single Window. SATH will support and facilitate the processes for the establishment of a Botswana National Single Window system to streamline cross border trade. The current SATH Trans Kalahari Corridor (TKC) Cloud Computing Connectivity program, which is being piloted between Botswana and Namibia, provides an ideal technology platform for linking Botswana and Namibia Single Windows, leveraging the investment by BURS, Namibia Customs and SATH to date in the development of this system. SATH is currently in the process of gauging support for National Single Window in South Africa.

Excuse my cynicism, but the SA Trade HUB has yet to demonstrate the viability of its Cloud Computing solution between Namibia and Botswana Customs. What is reported above is the usual sweet and fluffy adjectives which accompany most international customs and trade ICT offerings, ignoring prerequisite building blocks upon which concepts such as Cloud and Single Window may prove beneficial and effective. Past project failures in Africa are usually blamed on the target country in not bedding down or embracing the new process/solution – never the vendor. Given the frequency of technology offerings being presented by donor agencies on unwitting national states, there seems little foreign interest in ‘bedding down’ or ‘knowledge transfer’ than the ‘delivery of expensive technology’.

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.

Border Posts, Checkpoints and Intra-African Trade (mpoverello.com)
WCO/SACU – IT Connectivity and Data Exchange (mpoverello.com)
WCO News – February 2012 Edition (mpoverello.com)
East Africa – Harmonisation of Border Procedures (mpoverello.com)

May 9, 2012 by Mike Poverello

What westerners don’t understand about modern economy

Why is the Chinese economy thriving while that of the West is in crisis? The answer is of great relevance to Africans who have for decades embraced development models created in the boardrooms of Western capitals. Source: AllAfrica.com

Social dumping, unfair competition, undervaluation of the Chinese currency, the Yuan … these is some of the blame that most Western economists and politicians are laying on China. What about if this small beautiful world was off-target?

The growth of China and its strategic position as the first world emerging power have caused unprecedented disarray among the former powerful nations and a consistent visual navigation among Western economists and politicians who were undeniably a few years ago a reference for the success of their economic model which seemed to be irreplaceable. There was a state of complete disarray over 10 years in developed countries struggling to find a compass to better guide their ideas and understand where the position of the East is over the 21st century.

WHAT WOULD HAPPEN IF COMPETITIVENESS TOOK A NEW FACE?

It is disconcerting to see Western economists take childish considerations to explain their lack of competitiveness with China and saying that a huge industrial desert seems to have comfortably established itself in the West and arguing that employees are low wage-earners in China. It is not true. This assertion is wrong because wages are twice lower in Africa and South America than in China, although these two regions of the world do not attract the same amount of investments. The real reasons lie elsewhere.

1. There is a strong state in China exercising influence in almost all the economic process with clear and visible objectives to help millions of Chinese out of poverty.

2. In the make-up of product cost, labour accounts for about 2 to 4 percent or 10 percent at most. It is absurd that in the West, people use the issue of alleged high wages as an excuse to justify non-competitiveness of businesses. If an Italian producer put an item in the market for 100 Euros, whereas his/her Chinese rival is able to sell the same item for 25 Euros, the 200 percent difference cannot be justified as 10 percent of labour cost.

Even if wage cost was granted for free to Europeans producers, there will always be a 190 percent gap to be filled. Focusing on the value, the West will possibly find an initial solution to its current economic crisis which is, unfortunately, at its beginning; a solution to the costs of industrial architecture in the country, purchase of raw materials, the quality of vocational training and logistics to capture the customers who are at the other side of the world. We will review this issue below.

3. State purchased raw materials: Each manufacturer in the West has to find inputs on his own throughout the world, but China is using other methods through state giants to combine all purchases and, therefore enabling the country to be more successful and enjoy the best purchase conditions than a private Western individual waging a humanitarian war.

4 State semi-finished products: A car manufacturing company, for example, in the West has to get supplies from sub-contractors, but in China the government provides necessary stuff and bike manufacturers, for instance, will buy state-provided parts.

It is the same case for air-conditioner manufacturers and other key economic sectors; where an Italian manufacturer has to ensure alone the whole production, his Chinese counterpart, with whom he will be competing in the market, will only deal with a part of the production process, very often, when it comes to assembling and selling items. The parts that Chinese assemble in their factories are donated by their government in need of more revenues by creating more jobs with a view of revitalizing the national economy.

5. Energy is not sold in the opinion of the Chinese. In terms of stock exchange capitalisation, according to the news article published in the magazine Fortune Global for 2010, among the seven largest companies in the world, six of them are dealing with energy: American, British and Dutch companies and the three others are Chinese.

But the most interesting thing is the gap between Western and Chinese companies regarding the profits made by the former; they are higher than for the latter. For example, oil company Shell with 97,000 employees makes $20.116 billion in profits; Exxon Mobile with 103,000 employees generated a net profit of $30.40 billion. The Chinese company Sinopec seems to lag behind; with its 640,000 employees it made only $7.63 billion while its counterpart China National Petroleum, employing 1.5 million people, made just a profit of $14.37 billion.

According to conventional assessments in the West, Shell and Exxon are to be praised for their good job. However, in the pragmatic view of the Chinese, high profits are an indicator of impediment to nation to remain competitive. Chinese authorities consider that business competitiveness begins with energy cost. Companies operating in the energy sector should make profits to conduct their own market research and to explore potential customers, whereas in the West, generating huge profits will delight shareholders, because their names will be on the list of richest individuals in the world.

This different view on the economy was even more acute in 2008 during the crisis marked by a rapid rise in crude oil prices in the markets enabling all Western oil companies to make historically high profits. Exxon Mobile, for example, says there has been an 11 percent increase in its profits last year, $45 billion compared with 2007’s figures in France.

During the same year, the French company Total said that its profits were $22 billion (17 billion Euros), but its Chinese rival, Petrochina, a leader in terms of quantity of petroleum products, lost money because, I think, a very smart political decision made by Beijing government on freezing fuel prices led to a drastic drop of 22 percent in the net income in order to allow Chinese companies to remain always the most competitive in the world.

It is obvious that many petroleum products, such as plastic toys, car accessories, and packaging materials are made in China. Labour costs are not cheaper in the country, but the government expects real benefits at the end of the production line in terms of job creation, accumulating foreign currencies and trade surplus. China is not speculating foolishly in everything that moves, because it can cause a hard blow to the economy following the current situation of the West. China has set a clear objective to distribute generated wealth, to contribute to help millions of people out of poverty, and not to praise the glory of people whose names are on the annual list of the world billionaires in Forbes news.

In terms of petroleum products in Europe, it seems that those in power want to have their cake and eat it at the same time. We want business competitiveness, but at the same time put a 77 percent tax on energy products, accounting for nearly 40 percent in the make-up of the cost of finished products to be transported to the shop and delivered; even the travelling cost incurred by the buyer can also be taken into consideration.

The rise in oil prices is similar to this, but it is even worse in the electricity sector in China, which is almost free of charge. In 2010, power company State Grid Beijing Corporation, the top in the world, with its 1,564,000 employees and hundreds of millions of subscribers, made only $4.56 billion in profits, that is to say less than $5 billion generated by EDF, the French Power company, in 2009 (before it plummeted to 74 percent in 2010 due to setbacks suffered in foreign markets). This company has 158,000 employees, 10 times less people working for its Chinese rival and the number of its subscribers as well is 20 times fewer. The truth is that EDF, a state-owned company’s subscribers are like pigeons that need to be plucked with increases at the beginning of each year by using various pretexts, such as approval is to be obtained for a change in the oil price when it rises.

LOGISTICS AS A GEOSTRATEGIC TOOL FOR POWER

China has got sea behemoths that determine very often political prices. It is not dumping, but operators are just charged at cost price. For example, China Ocean Shipping Company (COSCO), owner of 201 container ships equivalent of 900,000 20-feet average size of a container, allowing freight forwarders to charge 20-40 feet containers from China for delivery in any port in Europe at incredibly low prices, in line with the goals the Chinese government wants to achieve in terms of export. It means that COSCO, a state-owned company, is not looking for profits for itself but looking for benefits of the whole Chinese nation. It is a very powerful geostrategic instrument contributing to the achievement of objectives, winning potential markets in order to bring the Chinese coasts closer to the rest of the world. So, the paradoxical thing is that the cost of land transport within Europe is often four times more expensive than a 30-day maritime transport from China to Europe. We know that 75 percent of trades in Europe are done between European countries and it is easy to guess that this represents an opportunity for China in the coming years if nothing is done by European economists to find a long-term solution to the current economic situation.

On 7 June, 2010, Cosco purchased parcels of land for 1.90 billion Yuan sold by Shanghai local authorities, meaning that this area will become in 10 years the first financial centre in the world. The real estate business is still under the Chinese government control. In fact, out of 11 parcels of land offered for sale, nine were purchased at auction by state-owned companies and only two were purchased by Chinese private companies.

The image of Cosco reflects the versatility of Chinese state-owned giant companies controlling almost everything in the industrial sector, ranging from port management ($ 3.4 billion to handle containers in the port of Piraeus in Greece in 2008) to real estate through the construction of ships and manufacture of containers.

This type of business provides the company with great advantages relating to competitiveness of Chinese businesses while their rivals have to go through a wide range of specializations, let’s say, to make as much profit as possible, according to the capitalist development model. For example, the French branch of COSCO, headquartered in Paris, has been operating in all the French port cities, primarily as a shipping company in the field of consignment, ship repair and air freight in order to achieve the same objective as a new product out of a Chinese factory and it should reach every destination without suffering any penalties regarding transportation or logistics.

In June 2011, 52 Airbus A320 were built in a new plant in Tianjin, China. Once again COSCO acted as a major contractor to execute programmes of Tianjin Airbus Company and was responsible for shipping heavy pieces from Europe to Tianjin, especially barge, inland and maritime transportation of containers, including domestic air transport to the unit in Tianjin.

Once again, the choice of a Chinese state-owned company is not made by chance, but it is the result of a geostrategic decision carefully thought out. In fact, COSCO has been chosen to conduct the same operation, but in the opposite direction, from China to Africa, for assembling an aircraft called XIAN MA-60, with which China pledged to replace the bad habits of Africans who buy only old airplanes from the West. This type of airplanes have been proved as real flying coffins over Africa and are paradoxically more expensive than the new ones built in China. The Chinese company, Xia MA-60, has already been providing equipment to Zimbabwe, Burkina, Burundi and South African airlines.

The Chinese People Daily newspaper of May 25, 2011 said that British Caledonian and Laos Airline and Sri Lankan Air-Force are serving about a hundred destinations and several companies in Asia, Africa and South America. Some indiscreet sources in Beijing report that COSCO will shortly transport aircraft pieces from Chinese coasts to Africa, in the port city of Kribi in Cameroon, where a deep water port is being built to dock large boats.

When the European Aeronautic and Defence Space (EADS) was installed in China, the Chinese government required this company to purchase a large number of its aircraft, but the country is planning to build airplanes for Africa to be used on African soil. Chinese economists and strategists are showing that they understand what Western economists are still struggling to understand about modern economy. The West cannot persist to be successful alone while everything goes perfectly. It’s the right time to help them build new partnerships with other countries to help them when tough times come, because you can provide them with means and opportunity to find a way out.

DEMOCRATIC WEAKNESS

If the democracy of universal suffrage was something so wonderful, there’s no doubt that the West would prefer to keep it or even hide it as a military secret with a view of using its advantage over the rest of the world. If democracy of universal suffrage could allow the development of a nation, it is obvious that the West would not commit itself to back ad hoc opposition groups in such countries to help them become redoubtable rivals in terms of industrial and intellectual production. The truth is quite different and much bitterer. The West understands that one reason for its decline is universal suffrage democracy which brought to power the most mediocre personalities, provided that they are supported by rich people who rarely serve public interest.

The mediocrity of politicians was accompanied by economists trapped over the alleged unwavering superiority of ultra-liberalism. We saw famous economists in Spain, Greece, Portugal, France and Italy arguing that Germany should provide financial assistance to European countries in crisis, because they believe that Germany has been generating huge revenues from the sale of large saloon cars in those countries.

This kind of reasoning betrays the state of collapse of the economists who are unable to understand that Germany cannot afford to save itself and the beginning of its economic crisis is a matter of time; all Western countries seem to be unaffected by this situation because they are governed by the same economic models. The worst is that, the same nations are planning to compete with China. How can they achieve if they refuse to do the easiest exercise in order to share profits generated by Germany, and they have to wonder if they can manage to sell their items in Germany, the first marketplace in the European Union?

The truth is that these economists have already surrendered themselves and given up fighting for lack of ideas. They are moving on to the secondary plan saying that the West would become a tourist destination for people coming from developing countries. President Barack Obama revealed on January 18, 2012 at a tourist park in Florida that he wants to make the United States the first tourist destination in the world in order to boost employment. Mr. Obama does not know that tourism has never helped a country to develop.

He is challenging France as the first tourist destination in the world with 77 million visitors in 2010 (against 59 million in the United States, the second), but the country would not have faced the current financial crisis if tourism was a magic wand. Western economists who believe they have found a miraculous plan to end the crisis by predisposing infrastructure to house rich people from China, India and Brazil, will ask themselves why the French Riviera, the prestigious place for tourist attraction in Paca region where the number of poor people is paradoxically the highest than in the rest of the country.

No country will be able to fight poverty if some people refuse to be in the production trade. Even the richest tourist in the world is not going to consume alone food for five people and if he has to import it to meet his needs, he will return to the starting point, regardless of the difficulty he will encounter to become a specialist on rich people. As some Western paedophiles visited Thailand, the Mauritius government fearing the spread of sex tourism in the country decided to promote luxury tourism.

Unfortunately, 30 years later, drugs are being smuggled into the capital Port Louis by luxury yachts and private jet aircraft, which are not controlled by the authorities who do not want to offend the rich. Nevertheless, we wonder if the current crisis in the West can transform institutional racism because only white people could enter the United States without a visa. The keen interest of the American president in tourism will be a progress for the world, primarily Taiwan, a long-standing US ally, will be the first country to benefit from it. The truth is that the North in crisis is no longer attracting many people, even the poor from the South.

INTELLECTUAL COMPETITION

According to an article by Christine Murris published in Valeurs Actuelles, a French magazine, dated 19 January 2012, in France only 14,700 students enrolled at engineering schools out of 16,800 seats available in 2011. The worst thing happened to graduate engineers in 2010: only 42 percent of them have been able to create wealth. The others have been hired by job speculators in the financial sector. Before students’ graduation, several insurance companies and banking institutions are interested in their mathematical skills to make them earn more money without making any efforts.

At the same time, nine universities out of 11 in Tianjin, the third largest city in China, provide engineering education. In the West, political power is held by people who studied law or literature, whereas in Chine political power is in the hands of engineers. So, we can now understand why Chinese and Western young people are keenly interested in a wealth creating profession. However, both parties are competing with each other. It is surprising to see that all measures taken against industrial desertification in the West will not affect the true values of the whole society.

Today, there is a real intellectual competition among nations. A nation will develop if it has the ability to be ahead of the competition by making sure that sufficient numbers of people are trained and are available to work for factories where they can imagine and create things.

The West believed for over two centuries that intelligence was related to the DNA of so-called white Caucasians. The West is unable to take up a huge challenge represented by the East; that is to say engineers’ competition. A computer and a phone get old after three months of use, that’s the challenge. Symbols are not going to change things.

NATIONALLY COMMUNIST AND INTERNATIONALLY CAPITALIST

In the 2011-2012 report of the forum of 1600 European companies operating in China, it is said that China is a communist country on the national level and capitalistic abroad. This severe report says that ‘it must be particularly good for China to practice the most unbridled export-oriented economic liberalism policy while building up fundamentals of state-controlled economic system in the domestic market following the examples of the Soviet.’ This 338-page report signed by the chairman of European Union Chamber of Commerce, Davide Cucino, and his general secretary, Dirk Moens, reflects the frustration of all Western entrepreneurs operating in China in the hope of getting a billion Chinese consumers. They have no choice other than exporting from China to their native countries.

We are all concerned by this and we need to review thoroughly any economic theories of the two previous centuries taking no consideration of a country’s possibility to play two roles simultaneously: A communist system practiced within the country and unbridled capitalism abroad. Without this rewriting, there is no solution to competitiveness of Western businesses. It may even reduce to nothing the labour cost in the West and will not change significantly the path of the race towards the wall when the issue is vitiated by an uncontrolled variable, such as the role played by the state in modern economy.

WHAT LESSONS FOR AFRICA?

Mandatory privatisation urged by the International Monetary Fund and the World Bank are monumental blunders not be made. For example, the privatisation of the state-owned power company, SONEL, in Cameroon taken over by AES, a US private company, was a strategic mistake of great importance because not only electricity cuts continued but also in a country that intends to develop from its industries, the energy price, especially for electricity, should be determined in comprehensive policy measures to ensure that businesses remain competitive and are better prepared to operate and increase their shares in the international market.

The recipe that Western-educated Africans applied providing that tax should be levied on everything that moves is another strategic mistake that leads straight to failure.

The urgency for Africa is to produce wealth and the government should make sure that production is effective on a large-scale and distributing it will be easier if there is something to share. Africa must export its finished products in order to get foreign currencies necessary to the welfare of its people. The strategic energy prices (gas, diesel, electricity) are more important than the low cost of labour. Taxing people trading at the edge of paved roads may give the illusion of alleviating the state financial burden in Africa. This is a wrong revenue economic system in the West that impedes African competitiveness.

The issue Westerners are faced with is the morality of their system. African economists must endeavour to draft their own economic theories that take into consideration the African interests and realities, instead of being in a permanent standby in order to occupy a subordinate position in Western institutions .In my opinion, what is needed is the courage and independence of African economists to distance themselves from the formulas developed by bureaucrats in Washington to find their own way through new African variables. These variables modified in the context of the 21st century would do a great honour to intellectuals who have the ambition to be creators of a new Africa.

So, an international institution acting against the interest of Africa but dedicated to defend the interest of the West will be created. Africans must ask themselves why the European Union failed to prevent China from investing in Africa. Why the US administration, as well, failed to slow Chinese investment in Africa. Regardless of this, everybody wants to work in the future for Western institutions. How is it that Africa will be out of poverty with Chinese investment than the International Monetary Fund (IMF) turning everything upside down by taking a stand?

In early August 2011 in Nouakchott, Mauritania, the African Caucus was held, a meeting of African countries and their creditors, led by the IMF director. What can be remembered from the meeting is the excitement about a thousand billion dollars that China had drawn from its reserves to inject into the African economy (as a comparison, the famous Marshall Plan worth of $100 billion, is 10 times lower than the former).

There was astounding news from Burundian authorities, very happy for signing contracts with China, they feared reprisals from the IMF. On December 21, 2010 in virtue of a decree, the US President Barak Obama excluded the Democratic Republic of Congo from the list of African countries eligible for the AGOA project and no duty-free export to the United States from the country was possible, because of massive Chinese investments in DR Congo, even if the official reasons for this were the decline of democracy in the country.

Paradoxically, while taking advantage of AGOA and exporting finished products to the United States, authorities in Congo really needed someone to invest in their country to set up processing plants. How can we blame them for accepting Chinese funds?

African municipalities must compete in a smart way to create wealth and therefore create jobs for their own people. Ninety percent of the Bibles used by many religious groups in the United States are printed in China. Most of those printers are owned by local governments deriving income from this business to pave new roads and create more jobs. Municipalities are able to create resources that can ensure the emergence of a strong state in a position to resist and stop the selfish and individualist force. Otherwise, it is not excluded that the continent will free itself from the yoke of the West and to see an internal yoke of a few clans who cheerfully install a revenue economy, exactly the same model that is leading the West into a wall.

Jean-Paul Pougala, a Cameroonian, is director of the Institute of Geostrategic Studies in Geneva, Switzerland.

April 13, 2012 by Mike Poverello

Customs Core Skills – in danger of extinction or a casualty of progress?

The recent death of a close friend and colleague – Lester Millar – brings to mind, once again, the dire situation of a dwindling ‘knowledge base’ in the area of Customs’ core competency. In an era where most customs or border management authorities are happy to employ people with a variety of tertiary qualifications – with the idea that this alone will be sufficient to ‘arm and support’ them in the field of customs/border control and management – what happened to the skills of yesteryear which allowed both government and trade practitioners to exercise their technical abilities to agree or disagree amicably on a customs tariff or valuation interpretation that could result in thousands of rands (ZAR) going to state coffers or the retailer’s bank account?

Many would argue that with the extent of automation and modern techniques, customs core skills are no longer valid or even necessary. Indeed the extent and design of systems goes so far as removing the relevance of human intuition and decision-making. Today we have automated risk management, automated duty calculation and declaration processing, automated cargo and goods accounting, any even a call centre – so is there really a role for a Customs specialist in the 21st century? Customs Managers today have their reports and other so-called ‘empirical data’ to rely on for decision-making and strategizing. The year-end revenue rush, it-self, relies on such computer generated reports negating the need for an internal ‘think-tank’ to devise means of collecting the hidden revenue before the deadline.

For those in the trade, a similar situation exists, with some difference however. The traditional customs clearance and cargo reporting process is highly mechanised these days and if your systems are up to the task, you can rest assured staff can remain glued to their seats and screens without having to venture to the Customs House. Here too, lies a significant change. The traditional Custom House no longer exists and is basically home to the ‘Customs Frontline’ which deals with ‘physical’ intervention and other trade services. Tariff, Valuation and Origin are now confined to back-office functions accessible via a call centre or tiered response mechanisms embedded in Customs’ new automated workflow; that is, if physical or telephonic access to regional customs specialists have been removed.

Few can dispute the advantages of technology supported processes. Yet, when things go array, even the knowledgeable people have difficulty in resolving an issue. Some suggest that human discretion is dangerous and counter-productive, which perhaps is true if left to an uncouth, power-crazy customs or border control official. Yet, ‘discretion’ is a tenet most necessary for interpretative and cognitive skills which once most Customs Officials used to have.

So what is this core competency to which I refer? First of all Customs competency requires an officer to reason, interpret and apply the customs law in the “fairest” possible way based on the facts at his/her disposal. So it means the officer must have an ability to discern; importantly between right and wrong. Discernment must also take into account an acute understanding of previous/historical evidence relating to a case. For a customs official, it will be important to comprehend the rights and legal obligations of the parties concerned, as well as the documentation relating to the case/transaction. Moreover, where a case/transaction deals with a matter of ‘tariff’, or ‘valuation’ or ‘origin’ the officer must at least have the basic knowledge and skills of the internationally defined rules of interpretation in these disciplines. I say ‘at least’, because in any of the mentioned areas, it may require an expert opinion to further conclude the outcome of a matter.

While automation will take care of validation and computation to the n’th degree, storing and retrieving vast amounts of data in milliseconds, the fact remains that a competent ‘human being’ is still required to preside over a complex decision. Good systems are built on ‘rules’, not exceptions. It is the latter therefore that requires ‘customs core competency’ to resolve.

Our dear friend and colleague Lester was gifted with a phenomenal ability to distill and comprehend information. This knowledge made him one of our finest, and sadly virtually last remaining tariff experts. Add to this, a wonderful and helpful nature and willingness to serve the public – a not too common trait nowadays. Adios Lester…..since we did not fully profit from your time with us, may we at least profit from our loss!

Customs Modernisation Release 3 – SACU (mpoverello.com)

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