DRC – Tale of woe as Customs System brings Trade to a Halt!

Kasumbalesa1Democratic Republic of Congo’s (DRC) border post with Zambia, one of Africa’s busiest land frontiers, went high-tech, with a web-based customs system that was meant to improve efficiency and eradicate corruption. It’s not quite working to plan. As officials struggle to get to grips with the new system and DRC’s decrepit phone network groans under the weight of data, the Kasumbalesa border post 300 km (200 miles) north of Lusaka has almost ground to a halt, according to drivers and freight operators. The result is a tailback of trucks stretching at least 20 km into Zambia and a spike in prices in Lubumbashi, impoverished DRC’s second city, which has lost its one proper road link to the outside. The bottleneck is bad even by African standards but it throws into stark relief the problems governments face as they try to remove the numerous bureaucratic and physical barriers to intra-regional trade across the poorest continent.

The Kasumbalesa blockage is being felt 100 km away in Lubumbashi, a bustling mining city of several million who rely on the 450 trucks a day that normally pass through the border laden with everything from biscuits to cement to paraffin. Shop owners are stockpiling and prices of staples such as casava powder – known locally as fufu – have gone up 50 percent in three weeks. “This has already had a big effect. It is causing lots of problems for the population,” Lubumbashi resident Charles Pitchou said.

Kasumbalesa – at the heart of the relatively prosperous and developed Copperbelt – was meant to be an example of how to do it properly, a frontier handed over to a private firm to make customs run like clockwork.

In one of the first public-private partnerships on African borders, an Israeli-run firm called Baran Trade and Investments won a 20-year concession in 2009 to build a “one-stop” customs post and operate it for 20 years. (Makes one wonder why the countries have a Customs authority in the first place?) With $5 million of Baran’s own money and a $20 million loan from the Development Bank of Southern Africa, the Zambia Border Crossing Company (ZBCC), as the subsidiary was known, had a streamlined Kasumbalesa up and running in 2011. Local media reports suggested much-reduced crossing times. However, Lusaka canceled ZBCC’s contract in late 2011 when President Rupiah Banda lost an election and his successor, Michael Sata, ordered investigations into a slew of state deals struck by his predecessor. TheBaran deal never went out to public tender and the fees charged to trucks – $19 per axle – were too high. It also said giving control of the border to an outside concessionaire was a threat to national security and that the reduction in waiting times was not as dramatic as the firm said. Baran’s chief executive, contacted via ZBCC’s website, did not respond to requests for comment.

With Baran gone, the state-run border posts muddled through until September, when DRC upgraded its systems from ‘Sydonia++’, a set-up widely used in the 1990s, to a web-based successor called ‘Sydonia World’, freight operators and regional trade experts said. Although UNCTAD was pushing use of ‘Sydonia World’ as far back as 2002, the data burden was too much for DRC’s computer networks, which crashed.

“The system is very good but if you don’t have a decent Internet connection, it doesn’t work,” said Mike Fitzmaurice, a South African logistics consultant and editor of online trade journal Freight Into Africa. National government spokesman Lambert Mende said a vice finance minister had been despatched from Kinshasa, 1,500 km away, to resolve the problem.

Zambia too is pulling out the stops to get the border moving again in a region important to its economy. “We need to have a normal flow of goods and services because this affects the entire region,” deputy trade minister Miles Sampa told Reuters. One stop-gap solution has been to scan documents in low-resolution black-and-white, rather than full color, to ease the data burden. But even if the two sides iron out the immediate snafu, the fiasco has provided another example of the dream of a seamless, integrated African border crossing falling short of reality.

Zimbabwe and Zambia upgraded their Chirundu border to a one-stop frontier in 2009 but crossing times have only dropped from 38 hours before to 35 now, according to Fitzmaurice, who compiles weekly records on delays. By contrast, customs clearance within the 114-year-old Southern African Customs Union (SACU) – South Africa, Botswana, Namibia, Lesotho and Swaziland – can be as little as 30 minutes. “Once you go north of SACU, into Zimbabwe, Zambia, wherever, there’s no such thing as a ‘good’ border post,” Fitzmaurice said. “The concept behind all these systems is good but the implementation just falls down every time.” Source: Lusaka Voice

Boost for Intra-African, BRICS Trade

BRICS-logoSouth African companies, including foreign companies based in South Africa, stand to benefit from relaxed cross-border financial regulations and tax requirements, Finance Minister Pravin Gordhan announced in Cape Town on Wednesday.

Delivering his 2013 National Budget speech in Parliament, Gordhan said that outward investment reforms that applied as part of a new set of “gateway to Africa” reforms would also apply to companies seeking to invest in countries outside of Africa, including in the BRICS (Brazil, Russia, India and China) countries

Boost for cross-border trade

These reforms include the relaxation of cross-border financial regulations and tax requirements on companies in South Africa, as well as reforms making it easier for banks and other financial institutions in South Africa to invest and operate in other countries.

Brand South Africa welcomed these moves as being in line with South Africa’s National Development Plan (NDP), which acknowledges the global shift of economic power from West to East, while also highlighting the rise of Africa.

“This is an important step to enabling trade and supporting regional integration,” Brand South Africa CEO Miller Matola said in a statement following Wednesday’s Budget speech.

Gordhan said Africa now accounts for 18 percent of South Africa’s exports, including nearly a quarter of its manufactured exports, and that the SA Reserve Bank had approved over 1 000 large investments into 36 African countries over the last five years.

Southern Africa development projects

South Africa is also helping to fund several development projects in the wider southern African region, with the Development Bank of Southern Africa (DBSA) accelerating investment into neighbouring countries, particularly in the field of electricity generation and transmission and road transport.

Added to this, South Africa’s Industrial Development Corporation (IDC) last year funded 41 projects in 17 countries to the tune of R6.2-billion. Most of these projects were in industrial infrastructure, agro-processing and tourism.

State company Eskom was also now considering investing in several regional generation and transmission projects outside South Africa. (Comment: I would have thought Eskom would ensure the money was spent on the local South African electrical grid! After having its expected 16% tariff increase halved last week, its quite incredible that such a notion can be in the cards. The South African public are truely being kept in the dark!!!)

Gordhan said there was a proposal to pool the foreign exchange reserves of the five BRICS member countries, with the idea of using this to support one another in times of balance of payments or currency crisis. Brazil, Russia, India, China and South Africa collectively hold reserves of US$4.5-trillion.

He said work was under way to create a trade and development insurance risk pool, with the aim of setting up a sustainable and alternative insurance and reinsurance network for BRICS members. Source: SA News.gov.za