The Subtleties of Red Tape 

Picture – Vincent Branciforti

The following article by Dr Richard Grant, originally featured in BizNews on 19 April 2022.

It might be hard to imagine that ‘red tape’ could be your friend. Although we never actually see the red ribbon or tape that was once used to bind government documents, we do see the ponderous power of its spirit when experienced as in the Britannica Dictionary definition: “A series of actions or complicated tasks that seem unnecessary but that a government or organisation requires you to do in order to get or do something.”

Dr Richard Grant who does not have a suppressed memory of the stress, frustration and wasted time that so often come with the need to deal with a government bureaucracy to obtain a document, or to get something done? Who has not asked, “Can’t we just cut through all this red tape?” I can certainly commiserate. But be careful what you wish for.

Those old red ribbons or tape that bound those documents were merely a physical manifestation of the existence of law. Although the king might have been absolute in his power, he would keep that power only through a set of rules that would constrain the subsidiary power and reach of those who acted in his name. Throughout the ages, each government officer or bureaucrat has had his own personal desires and interests that could be quite different from those of the legitimate government leaders or of the ‘will of the people’. The rules imposed on them by the king or parliament serve not only to ensure that the king’s will would be done by the bureaucrats, but also to protect the king’s subjects from the personal whims of those same bureaucrats.

It is this latter feature that we are most in danger of losing. The protection of citizens from the arbitrary powers of government bureaucrats and their superiors is a key feature of those countries that are not only the most prosperous and free, but also most respectful of their citizens. That is the essential purpose of the rules and conventions that we call red tape. Without such controls, each bureaucrat with whom we deal would have potentially unlimited dictatorial powers. The red tape limits the size of the bureaucrat’s fiefdom and the scope of his powers within that fiefdom, thereby limiting the reach of his power over us.

Our problems with bureaucracy arise, not from the bureaucracy itself, but from the government (elected or otherwise) that creates more programmes and regulations for the bureaucracy to manage and enforce. As governments interfere more in our lives, bureaucracies must necessarily grow and become more powerful. That is what pushes out more red tape to bind ‘we the people’ rather than the bureaucrats and government officials.

When the people demand that the government do more for them, they are in essence asking the government and its officials to take on greater power and to have greater influence over our lives. That is when red tape becomes a visible and pernicious issue in daily life. Increasingly, we find ourselves dependent on some bureaucrat’s permission to conduct even the most basic aspects of our lives. To what extent do we need a bureaucrat to determine what we may buy and sell, what we must pay for petrol, from whom we are allowed to receive medical services, how we may produce and buy food, and how we might educate ourselves and share information? We might even find that we need a bureaucrat’s permission to venture out of our homes, and to do so with our faces uncovered – again.

The highest form of red tape is the national Constitution, whether explicitly written or by evolved convention. It is the Constitution that specifies and thereby limits the powers of the government and its officials. It is the set of rules within which the lesser rules, such as legislation, are made. A true constitution is necessarily far more difficult to change than is mere legislation. Just as giving a referee the power to change the rules in the middle of a rugby match would ruin the game, giving a legislature the power to change the rules that constrain it, would unleash the seekers of plunder and dictatorial rule.

Those who would live in a free and prosperous society must remember that the purpose of a constitution, and the red tape necessary to enforce it, is to constrain the power of the government, not of the citizens. When citizens experience increasing interference in the normal conduct of their lives from government regulators and other officials, the solution is not to cut through the red tape, but to push back on that red tape to bind more tightly the legislators and executives who empowered the bureaucracy.

A free and prosperous people are those who bend red tape away from themselves, instead to encircle their government and its officials, to limit their bureaucratic powers, and to tie it tightly.

Original Article


Coordinated Border Management – An inclusive approach for connecting stakeholders

WCO Customs Theme 2015The WCO is dedicating 2015 to promoting Coordinated Border Management (CBM) under the slogan “Coordinated Border Management – An inclusive approach for connecting stakeholders”.

WCO Members will have the opportunity to promote the enhanced coordination practices and mechanisms that they have implemented within their administrations and with other Customs administrations and government agencies, as well as with economic operators involved in cross-border trade.

The term Coordinated Border Management (CBM) refers to a coordinated approach by border control agencies, both at the national and international level, in the context of seeking greater efficiencies over managing trade and travel flows, while maintaining a balance with compliance requirements.

CBM can result in more effective service delivery, less duplication, cost-savings through economies of scale, enhanced risk management with fewer but better targeted interventions, cheaper transport costs, less waiting times, lower infrastructure improvement costs, more wider sharing of information and intelligence, and strengthened connections among all border stakeholders. Source: WCO


Who Really Runs this Place?

SpinWatchUK public interest and transparency lobby group Public Interest Investigations (PII) recently published a somewhat perturbing paper on the activities and dubious role of the ‘Big 4’ accounting firms. The report aptly titled – Who Really Runs this Place?  takes a look at some of the relationships between the Big 4 accountancy firms and the UK government. It examines some of their lobbying activity: on their own behalf to block much-needed reforms of the industry that they dominate; at some of the lobbying they have undertaken to protect the tax avoidance industry; and at their role as lobbyists-for-hire.

Who Really Runs this Place? reveals how:

  • At least 50 employees of the Big 4 have been on loan to the government in the past three years;
  • One of the Big 4, lobbies for tax breaks for its clients – a service that it describes as a ‘low risk alternative’ to tax avoidance – while at the same time advising the Treasury on reform of the tax system;
  • They successfully lobbied the British government to oppose new EU rules designed to improve audit standards and challenge the monopoly of the Big 4;
  • They are profiting from changes to government policy, changes that are made by government departments that they are contracted to;
  • Lobbying by the Big 4 accountancy giants – either on their own behalf or for clients – is unlikely to be included in the forthcoming register of lobbyists.

You can also watch Spinwatch’s new Big 4 film here!



Latest SA Cabinet decisions affecting Customs

Coat_of_arms_of_South_Africa_svgGovernment Communication and Information (GCIS) has published a statement on Cabinet’s recent meeting (26 June 2013) revealing at least three key aspects affecting SARS as well as external stakeholders involved in or impacted by Customs business. An excerpt of the statement follows below.

Cabinet approved the submission of the Southern African Development Community (SADC) Protocol on Trade in Services to Parliament for ratification, in accordance with section 231 of the Constitution. The objectives of the Protocol are to liberalise intra-regional trade in services on the basis of equity, balance and mutual benefit. This Protocol also sets out a framework for the liberalisation of trade in services between SADC member states and serves as a basis for negotiations.

Cabinet approved the implementation steps proposed for the establishment of a Border Management Agency (BMA).  The BMA would manage migration, customs and land border line control services and efficiently coordinate the service of all departments in ports of entry. The Department of Home Affairs will be the lead Department in establishing the BMA.

Finally, and for some a contentious issue, Cabinet also approved the Customs Control Bill (CCB), the Customs Duty Bill, 2013 (CDB) and the Customs and Excise Amendment Act, 2013 (CEAA) for submission to Parliment.  The Bills provide a foundation for the facilitation of international trade and protection of the economy and society, thereby creating a balance between customs control and trade facilitation. Source: GCIS

Airport Cities – a view to a different trading environment for South Africa?

ace_skyscraper_237x352aerotropolisThis past week witnessed the first Airport Cities Convention in South Africa. It came at the timely announcement of the country’s first aerotropolis earmarked for development around Oliver Tambo International airport (ORTIA) and the surrounding industrial complex. While the City of Ekurhuleni gets prized possession of the ‘aerotropolis’ (in title) by virtue of the location of ORTIA, Johannesburg is set to benefit perhaps more greatly due to it being the epi-centre of South African commerce and trade. This represents significant ‘hinterland’ development which bodes well for future multi-modal transport and shipping activity for the Gauteng region and the country as a whole.

In support of government’s National Infrastructure Plan, is Strategic Integrated Project (SIPs) 2, otherwise known as the Durban-Free State-Gauteng logistics and industrial corridor. Infrastructure upgrades are already occurring to road and rail networks linking to the key cargo and distribution hub, City Deep. While the express purpose of an inland port, terminal or logistics hub is to provide relief for congested seaports, it likewise creates possibilities and opportunities to synergise with other transport forms. This serves to maximise capacity through integration offering local suppliers and foreign customers a host of trade, shipment and logistics options.

Foremost, an inland port is a hub designed to move international shipments more efficiently and effectively from maritime ports inland for distribution throughout the heartland. Think of the logistics of inbound freight as a barbell. At one end, inbound containers flood into a seaport, spreading across local storage facilities as they are unloaded. If they aren’t moved quickly enough from the port, they create a bottleneck that bogs down the entire distribution cycle as containers wait longer to get off ships, to get into warehouses, and to get back out and onto trucks and trains for final shipment. The Emergence of the Inland Port (credit: Jones, Lang, LaSalle)

In a world of increasing global integration, focussing more on global distribution of goods and services, it behoves our country to understand the dynamics of global trade and what in fact makes commerce tick. Today’s number 1 spot is not going to remain intact without continuous re-evaluation and innovation. It would indeed be arrogant (if not suicidal) of us to think that our current prominence and strength in the sub-saharan region will remain without innovation for the future. At the same time South Africa should welcome increased competition from its neighbours, both immediate as well as further north in Africa. The latest fDI 2013 Report indicates a decrease in foreign direct investment in South Africa (-5%) and Kenya (-9%), while at the same time a significant increase in foreign investment in Nigeria (+20%) and Egypt (+20%), respectively. True, the latter countries are far removed from South Africa’s immediate ‘playing field’, however do we fully understand the drivers which cause the named countries to attract FDI at such an increasing rate – are they capitalising somehow on our deficiencies, shortcomings, or lack of opportunism?

The National Infrastructure Plan can only be seen as a single cog in the machinery to keep South Africa competitive. And, while it is encouraging to witness these developments, a corresponding economic and commercial enterprise on both government and private sector is required to maximise these developments. Some smidgen of hope could lie in the Department of Trade and Industry’s economic principles which support Industrial Policy Action Plan (IPAP) and Special Economic Zones (SEZs), for example, however, several business commentators have already voiced concerns on exactly how these support the Infrastructure Plan. A further question lies in our country’s ability to facilitate trade, not only at our ports, but more importantly the ‘hinterland’ of our country and the neighbouring regions. Do our existing and future laws adequately provide for expeditious and facilitative procedures in the treatment of import and export goods? Are we sure that we are addressing all real and potential trade barriers?

Anyone desiring more information on the ‘aerotropolis’ concept should find some interest at the following websites –, and the City of Ekurhuleni

Zambia – government to crack whip on crossborder smuggling

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

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

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

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

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

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

Namibian Ministry of Finance angers clearing agents

Below is a situation which might have been avoided if trader registration/licensing was properly addressed by the Namibian Authorities. With the likes of SADC and COMESA encouraging the implementation of regional transit guarantees, trade operators need to clearly address their obligations and liabilities. Moreover, any suggestion of authorised economic operator (AEO) programme in the Southern African region needs to fully align its requirements with the standards being applied by other countries across the globe. It is therefore clear that no preferred trader scheme can be implemented across the Trans-Kalahari Corridor or across SACU if such disparities of knowledge and practice exist. While one might have compassion for possible job redundancies and the pleas expressed by certain clearing agents, they evidently do not understand the game they are playing in and will drastically need to redress their understanding of the role they play in the supply chain. International clearing and forwarding is not a game for sissies, or people who want to try their hand at a quick buck. A bold stance by the Ministry of Finance.

The Namibian Ministry of Finance’s decision to ban clearing agents from using guarantees and bonds from third parties as security to move goods has caused an uproar among clearing agents. The Deputy Minister of Finance, Calle Schlettwein, explained that the decision that became effective on July 26 was taken to protect the taxpayer. Clearing agents aren’t closed down, and neither are they stopped from using their own security to move these goods, he said. As from July 26, the agents are simply not allowed to use a bond or guarantee issued to another clearing agent as security for their goods in transit, the ministry said.

Before the clampdown, clearing agent A used to ‘borrow’ guarantees or bonds, backed by financial or other institutions from clearing agent B to clear any goods coming through Namport and destined for landlocked countries such as Botswana, Zambia and Zimbabwe. However, should a problem develop with agent A’s consignment, the guarantee or bond would be worthless to Government, as the financial institution agreed to back only agent B’s guarantee or bond. “We don’t know how or when the practice started, but it is illegal,” a ministry spokesperson said.,

Schlettwein said Government stood to lose out on duties and customs through the practice, and the taxpayers would have ended up having to pick up the tab. The ministry’s announcement was met with considerable protest from the smaller clearing agencies, claiming that they didn’t have the money or financial backing to secure the necessary bonds or guarantees. Nampa reported that 76 small and medium enterprises (SMEs) operating as clearing agencies at the coast have been affected. At the Oshikango border post and at Helao Nafidi in the North, 30 agencies with more than 100 employees are affected.

Regina Amupolo of Pride Clearing and Forwarding Agent has called on the ministry to urgently look into this matter, because many trucks with goods and containers are stuck at the Oshikango border post, Walvis Bay harbour or at other border posts. Their customers have already complained that they are losing business because of this, Amupolo said. Amupolo said most SMEs don’t have the money to obtain bonds or guarantees. She said ministry officials said anyone who wants a bond must have collateral of N$1,6 million. “We are small business people, trying to employ ourselves and some of our fellow men and women in our societies, but now the Government, the Ministry of Finance, is making things difficult for us. How are we going to make a living if the ministry is cutting off our jobs in this way?” she asked.

In a letter written to all clearing agents at Oshikango, the controller customs and excise officer, Festus Shidute, said the practice of using third-party bonds or guarantees posed a serious challenge to customs administration and control of guarantees in the event of liabilities by third parties. Amupolo and Rejoice Nangolo from Flora Clearing Agent said they have already paid N$20 000 to obtain a clearing licence, while they have to pay Namport another N$20 000. She said they are losing thousands of dollars as a result of this unexpected prohibition by the ministry and are demanding an extension to allow them to take the matter up with the ministry.

Nangolo said her business has branches at other border posts like Omahenene, Katwitwi, Ngoma, Wenela, Trans-Kalahari, Ariamsvlei, Noordoewer, Walvis Bay, Hosea Kutako International Airport and Oshikango. Her Angolan customers have threatened to stop moving their goods through Namibia and only to use their own ports, she said. At Oshikango there are only two big companies, Piramund and CRN, that can guarantee bonds and assist them as SMEs clearing their work effectively. According to Amupolo and Nangolo, they started with their clearing business in Oshikango in 2000 and were doing well until the ministry imposed the ban.

Speaking to Nampa, Lunomukumo Taanyanda of Oluvanda Clearing and Forwarding Close Corporation (OCFCC) said his company has been operational for two years and deals mostly with car consignments from countries such as the United Kingdom (UK) and Dubai.Before clearing the consignments, OCFCC has to declare the consignment at the Namport customs desk. However, before they can fill in a customs declaration form to clear the transit goods, the goods need to be secured and this is where the company (OCFCC) requires the assistance of third parties such as Wesbank Transport, Transworld Cargo and Woker Freight Services.

These smaller companies acquire assistance from bigger companies (the third parties) as they experience problems when trying to obtain their own bonds and guarantees. According to Taanyanda, it is a very costly and time-consuming process. “We agents do not have enough collateral for bonds, which start at N$350 000, and now the ministry has stopped us from borrowing bonds from third parties,” he said. Source: The Namibian

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Public Office – a way to pillage the state?

The following article featured in the Business Day highlights the endemic problems of a moral-less society with an unbridled desire to attain wealth at all costs. True this is not just a South African problem, one just has to look at the corrupt activities of ‘politicians’ and ‘big western bankers’ to realise the despair that has  been wrought for so many unwitting citizens, many of whom face a future of utter misery. With so much talk of anti-corruption measures and witch-hunts against whistleblowers, the article provides a down-to-earth explanation as to what it means to hold public office.

The abuse of public power and the plundering of state resources have become so pervasive in SA that events such as these can no longer be regarded as isolated episodes of delinquent public officials, each acting individually. Instead they should rather be ascribed to a political culture born of a profound misconception of the very notion of public office, held by sizeable numbers of public office-bearers ranging from the highest echelons of the executive to junior police officers and public servants. This misconception causes office-bearers to act in a way that is diametrically opposed to what public office requires.

Public office bestows power and authority on the public office-bearer. It demands that citizens recognise and yield to the authority that accompanies it, be it the meagre authority of the junior public servant, the often intrusive authority of the policeman, or the far-reaching authority of the president or ministers. Public office commands respect by virtue of the power vesting in the public office-bearer and from the fact that public office-bearers do not act in their own interest but in pursuit of the public good. But the rewards that accompany the highest positions of public office extend much further. They are publicly applauded and venerated or placed in a position to receive these honours.

However, there is a stark flip side to the public office, which is as essential to public office-bearing as the power and rewards that come with it. This is that the authority and honour of public office are rooted in a profound sacrifice, requiring the office-bearer to sacrifice his private self for the sake of the public good. The higher the public office, the more drastic the sacrifice of the private self must be.

These two aspects are equally vital to public office: the power and the honour as well as the sacrifice of the office-bearer’s private self. The state is rooted in this two-pronged premise and its survival depends on it. Hence, public office does not turn the office-bearer into some magnified private person, entitling him to private gain that is beyond the reach of the ordinary private person. Public office-bearers must sacrifice the private self for the sake of, and in exchange for, public authority.

The occupant of public office discharges his responsibilities strictly in accordance with the prescribed script of the public office concerned; he must act lawfully in accordance with the precepts of the office in question. This is not to say that he must act mechanically, because the way in which public office is discharged may vary from mediocre to exceptionally virtuous, yet always within the confines of the script of the office concerned. Hence, the office-bearer may never act outside the powers inherent in the relevant public office as laid down in law, leaving no space for private detours beyond the ambit of the script.

But there is mounting evidence of a deviant culture that is causing public office in this country [South Africa] to be widely and profoundly misunderstood by many incumbents, identifying it with only its first aspect — its power and honours — yet ignoring and rejecting the second and equally essential aspect — the service to the public good and the sacrifice of the private self.

In fact, precisely the reverse seems to be identified with public office, namely that public office somehow entitles public office-bearers to exploit the power and authority of public office to achieve maximum private gain for the office-bearer — and to receive public accolades for these “successes”. When this occurs, the public office-bearer becomes the exact opposite of what he should be, namely a freebooter, a privateer, harming the public good and robbing the state. And when privateering increases as the evidence of a culture of abuse of public office for private gain is mounting, the gloomy prospects of a faltering state loom large. The larger the number of these privateers, the more the state descends into an assemblage of competing marauders rendering patronage to their own retinue with no regard for the rest, who have to fend for themselves while witnessing the unfortunate spectacle of the receding state. Article by: Koos Malan, professor of public law at the University of Pretoria – Business Day news paper July 2012.

If you thought trade in Africa is bad, consider this!

On January 10 2012 the Argentine tax authorities passed General Resolution 3252/2012, requiring importers to file an advance import affidavit before the definitive import of any type of goods. The affidavit is analysed by the tax authorities and by any other relevant government agency; only once approval has been granted may the import be carried out  The resolution applies to all types of product definitively imported into the country as from February 1 2012.

Under the resolution, importers must file an affidavit (through the tax authority’s website) before issuing a purchase order or similar document. The authority will inform importers (through its online application) of any news regarding the status of their petition and, if applicable, the reasons for any objections made and the government agencies where importers can remedy those objections. Importers must enter the affidavit number in the authority’s María Information System when the goods enter customs clearance. The customs clearance process will be automatically stopped if this number is not entered.

The tax authority has a 72-hour period (from the date on which the affidavit is filed by the importer) to make any comments. This time period may be extended by up to 10 calendar days in “those cases in which the specific activities of the agency in charge so requests”. Once the above periods have elapsed with no comments being made, the import operation may continue. Otherwise, the comments should be dealt with by the importer with the agency that raised them.

Import operations that already have an open irrevocable letter of credit (or similar document) or that have been prepaid (in both cases dating from before February 1 2012) are exempt from the obligation to obtain an affidavit. However, there are some contradictions in the text of the resolution that may create problems at the time of applying this exemption. The following import operations, among others, are exempt from the obligation to obtain an affidavit:

  • imports made under the courier or sample regimes;
  • imports that relate to turnkey projects (provided that they were approved before February 1 2012); or
  • imports that are sent in different shipments (provided that they were approved before February 1 2012).

At present, the foreign trade sector of Argentina is almost paralysed, with no clear sense of direction. Only time will tell whether the affidavit system starts processing requests relatively smoothly, or if the paralysis will result in an increase in litigation by desperate importers. Source: taken from the article: “Argentina’s foreign trade paralysis continues” – International Law Office.

Pre-shipment Inspection (PSI) – an antiquated approach

Recently, an organisation called Global Inspection Group (GIG) has advocated PSI – an import verification system – as a solution to counteract South Africa’s trade deficit. The article Import verification would outlaw customs fraud’ alludes to the apparent success of these mechanisms in other African states to support quality and import standards in those countries, respectively. Because South Africa has no verification of imports system ‘it is easy to systematically under-declare goods’, the article states. Furthermore, it mentions that a Finance ministry would benefit from such a system ensuring the collection of the correct duties. [Really? how naive].

South Africa is a free country, and it follows that organisations will go to extremes to secure a business foothold in the country. The question is – to what length and to what end? If any ministry of finance were to rely on a PSI company, it would first disband its customs department, because there is evidently no trust in its frontline and post clearance capability.  Most governments (if not all) are pretty much aware of the broader international customs developments championed by the WCO. In recent years, the WCO has developed several diagnostic studies and programmes – with the option of donor funding if required. There would therefore be no sense or credibility in a government that would persist in pursuance of PSI services for fiscal assurance.

Any trade practitioner and supply chain operator in South Africa will readily confirm the hectic ‘change’ programme which is being pursued under Customs Modernisation. These changes and their associated systematic innovations and efficiencies are by no means the result of government capitulating in the face of illegitimate trade. No, it’s a conscious decision to take responsibility for the problem, and together with the allied trade to improve the situation.

It is therefore high time that such organisations which front themselves with the ‘be-all and end-all’ systems in Customs’ tariff and valuation appraisal rather seek a more practical and benefit-delivering model than one which not only scams governments for service and inspection fees, but also offers no benefit to trade. Included are those BOT vehicles offering governments ‘free’ cargo scanning equipment in exchange for a lucrative inspection fee. None of this is based on risk management and is purely profit focussed. The concept forgoes most if not all, the modern customs principles and standards promoted by the WCO. The buzz word is ‘Capacity Building!’

The reality in all of this should be clear. No private sector entity can replace Customs. Outsourcing in any event would require government to set up a vehicle of its own to ‘ensure’ that the outsourcer is doing his job. If there is a dearth in knowledge and skills, then it is up to government to rectify the situation.  Source: FTW Print version.