Tag / Southern Africa

by Mike Poverello

Historic Economic Partnership Agreement between EU and SADC

EU SADC EPAThe EU has signed an Economic Partnership Agreement (EPA) on 10 June 2016 with the SADC EPA Group comprising Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland. Angola has an option to join the agreement in future.

The other six members of the Southern African Development Community region – the Democratic Republic of the Congo, Madagascar, Malawi, Mauritius, Zambia and Zimbabwe – are negotiating Economic Partnership Agreements with the EU as part of other regional groups, namely Central Africa or Eastern and Southern Africa.

For specific details on the key envisaged benefits of the agreement click here!

The EU-SADC EPA is the first EPA signed between the EU and an African region, with an East African agreement expected to follow in a few months, but with the West African agreement having met fresh resistance. EU Trade Commissioner Cecilia Malmström stressed at the signing ceremony the developmental bias in the agreement, which extended duty- and quota-free access to all SADC EPA members, except South Africa. Africa’s most developed economy has an existing reciprocal trade framework known as the Trade and Development Cooperation Agreement, which came into force in 2000.

South Africa, meanwhile, had secured improved access to the EU market on a range of agricultural products, as well as greater policy space to introduce export taxes. EU statistics show that bilateral trade between South Africa and the EU stood at €44.8-billion in 2015, with the balance tilted in favour of European exports to South Africa, which stood at €25.4-billion. This improved access had been facilitated in large part by South Africa’s concession on so-called geographical indications (GIs) – 252 European names used to identify agricultural products based on the region from which they originate and the specific process used in their production, such as Champagne and Feta cheese. In return, the EU has agreed to recognise over 100 South African GIs, including Rooibos and Honeybush teas, Karoo lamb and various wines.Sources: EU Commission and Engineering News

 

 

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by Mike Poverello

Mauritius Revenue Authority – Launch of the WCO Multilingual Regional Training Centre

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The SADC region is now equipped with a third World Customs Organization accredited Regional Training Centre in addition to the South African and Zimbabwean Regional Training Centre. The Regional Training Centres are excellent platforms for Customs to advance capacity building and to share information and best practices.

The Mauritius Revenue Authority (MRA) has been selected by the WCO to host the RTC as part of the WCO initiative to optimise resources in the region and in line with government’s objective of making of Mauritius a Knowledge Hub. The RTC represents the 25 of its kind adding to the existing Centres across the world and is the fourth one in the WCO ESA region.

The Centre will enable the WCO achieve its mission of enhancing Customs administrations in the WCO ESA region thereby helping these Customs administrations to make an important contribution to the development of international trade and to the socio-economic well-being of their country.

Under the WCO strategy the RTC has four main objectives namely: development of regionally relevant training; maintenance of specialist trainer pools; provision of specialist training at a regional level; and development and support of the WCO’s blended learning programme. Moreover, it has as task to develop and maintain annual training plans and work in partnership with the private sector to maintain effective relationships between Customs and economic operators as well as assist Member countries in their training needs.

The Mauritius RTC is equipped with English, French and Portuguese language facilities as well as an e-learning platform. The Vice-Prime Minister and Minister of Finance and Economic Development, Mr. Xavier Luc Duval, formally opened the RTC on the 25th November 2013. In his opening address, Secretary General Mikuriya commended the leadership and continued engagement of Mauritius, previously as WCO Vice-Chair for the East and Southern Africa (ESA) Region from 2011 to 2013, and now as host of an RTC. He hoped that this RTC would serve to share knowledge and strengthen the human resource network for Customs cooperation and regional integration.

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by Mike Poverello

What Shoprite and Woolworths can tell us about Non-tariff Barriers

SAIIA PaperGauging from the title of this SAIIA report, it is the first time I ever saw the use of private sector entities as the vehicle for delivery. A nice and welcomed approach. While the report tends towards technical analysis, it does provide some sound thoughts on the extent of non-tariff barriers (NTBs) outside of the traditional barriers such as antidumping duties, quantitative restrictions, import levies. In fact the report focusses on licensing rules, import permits, standards as well  and customs procedures.These NTBs are likely to be less transparent but more prevalent and representative of the constraints Southern African traders face in selling merchandise across borders on a day-to-day basis.

It is interesting to see that corruption features in at least 3 out of the 4 NTBs by category identified by the private sector. While the quest for more automation at borders is definitely feasible, the question of limitation of human intervention at the border will undoubtedly be a stumbling block in many countries. It requires some political will to actually do something about the “rot” at borders. To access the report please visit the SAIIA website. 

The paper provides an overview of the incidence and impact of non-tariff barriers (NTBs) in the Southern African Development Community (SADC) region. The analysis draws on the growing body of literature on NTBs pertaining to regional trade in Southern and Eastern Africa, but importantly it supplements this with the experience of the private sector in the region. It reviews the current processes and achievements in addressing NTBs within Southern Africa. Practical measures are proposed to facilitate the removal of NTBs within Southern Africa, informed by the lessons from other regions. Source: South African Institute of International Affairs.

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by Mike Poverello

Will Africa’s Leaders Finally ‘WALK’ the Talk?

Kenya's capital Nairobi, September 23, 2011. The road, which is being built by China Wuyi, Sinohydro and Shengeli Engineering Construction group, is funded by the Kenyan and Chinese government and the African Development Bank (AFDB). The project will cost 28 billion Kenyan shillings ($330million), according to the Chinese company. AfDB has cut the expected economic growth rate for Kenya in 2011 to 3.5-4.5 percent from an earlier forecast of 4.5-5 percent due to high inflation and a volatile exchange rate, the bank's country economist for Kenya said on Friday. REUTERS/Thomas Mukoya

Kenya’s capital Nairobi, September 23, 2011. The road, which is being built by China Wuyi, Sinohydro and Shengeli Engineering Construction group, is funded by the Kenyan and Chinese government and the African Development Bank (AFDB). REUTERS/Thomas Mukoya

The citizens of the African continent have been introduced to one grand vision of development after the other – from OAU to AU. However, there is a tendency by some of the member countries to retreat from fulfilling regional treaty commitments, which, in some cases, would entail losing a degree of sovereignty.

What is the biggest stumbling block to achieving the African Integration Vision?

But after more than 50 years of solemn regional integration declarations these rhetorical and symbolic efforts still haven’t made the regional integration schemes any more inclusive. For example, when analysing the ‘inclusiveness’ trends as measured by Poverty and Income Distribution Indicators, most Sub-Saharan African countries won’t achieve the MDG target of reducing extreme poverty rates by half ahead of the 2015 deadline. This is despite the increasing total merchandise export as well as within most of the regional economic communities (RECs).

Some have tried to absolve policy-makers of the lack of progress with regards to achieving the milestones of the “linear” integration model based on the European experience and advocated by the Abuja Treaty. They propose an alternative non-trade oriented approach; the so-called functional regional cooperation. This perspective focuses on setting standards for transport such as the SADC recognized driving license; construction of a new regional corridors; an African identity etc. This less ambitious but perhaps more realistic perspective could lead to failure in removal of trade barriers, while at the same time presenting a much more positive outlook of regional integration than what international economic data would otherwise show.

The AfDB is attempting to get to the bottom of this regional integration – inclusive growth conundrum in its 2013 African Development Report, currently under preparation. But we might already get some good answers to this question through an ongoing research project entitled ‘PERISA‘. Led by the ECDPM & SAIIA, it intends to look deeper into what regional integration/cooperation really entails and what the underlying drivers/factors and specific bottlenecks are. In July, we got a hint on what to expect from the research project from a very enriching Dialogue on the Drivers and Politics of Regional Integration in Southern Africa.

National versus Regional

South Africa has developed a ‘2030 vision’ and national strategic plan. It includes some proposals to reposition South Africa hegemon in the region. However, very few of the National Development Plans (NDP) in Southern Africa even mention regional integration. Mauritius being an exception as it benefits from the support of the Regional Integration Support Mechanism (RISM), which is disbursed directly into the budget of the government as untargeted financial assistance. Notwithstanding this support and the disbursement to the nine other Member States of the Common Market for Eastern and Southern Africa (COMESA) and additional donor-supported initiatives in other RECs, there is still a flagrant absence of alignment between commitments taken at the regional level and the actual planning process at the national level.

This discrepancy between the regional and national level is a matter of concern because if these Regional Trade Agreement (RTA) commitments do not feature amongst the country’s national priorities then there is an even greater risk that they will not be implemented in practice. This latent risk perhaps goes a long way in explaining the relative poor record when it comes to the level of domestication of regional integration legal instruments, implementation of trade and regionalintegration-related budgets, implementation of Council of Ministers’ trade-related decisions, which the AfDB will seek to capture through its forthcoming system to measure regional integration in Africa.

During the meeting a call for a community of practice among national planning agencies was made which could assist and drive the integration process through the convening of regular meetings between regional and strategic national planners. It is positive to observe that Southern African countries seem to have warmed up to this idea of an informal community of practice outside the formal institutional structure.

What can Development Finance Institutions do about this inertia?

In addition to the supply-driven collection of regional integration statistics, Multilateral Development Banks (MDBs) could also lend technical and financial support to the formation of Regional Planning entities’ process. Amongst others this could include providing support to the above-mentioned community of practice of national development planners interacting with regional planners. This could eventually ensure that regional integration gets fully mainstreamed within the national planning policy instruments as illustrated in Mauritius’ latest 2013 budget, whose overarching theme rests on six main objectives, including fast-tracking regional integration.

There seems to be a consensus that the RECs must have technical capacity to facilitate the RTA negotiation process and decision-making process. Both the UK Department for International Development (DFID) through its TMSA programme and the AfDB through its forthcoming 2014-2016 Tripartite Capacity Building Programme are attempting to address this deficiency in a coordinated manner in line with fundamental principles of the Paris Declaration on Aid Effectiveness. Source: ECDPM
website (An analysis by Christian Kingombe, Chief Regional Integration & Infrastructure Officer at the AfDB).

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by Mike Poverello

Study into the cooperation of border management agencies in Zimbabwe

tralacZimbabwe is a landlocked developing country with a population of 14 million, sharing common borders with Botswana, Mozambique, South Africa and Zambia. Zimbabwe has 14 border posts, varying in size in accordance with the volume of traffic passing through them. Beitbridge, the only border post with South Africa, is the largest and busiest, owing to the fact that it is the gateway to the sea for most countries along the North-South Corridor. Zimbabwe thus provides a critical trade link between several countries in the southern African regions. The need for the country, especially its border posts, to play a trade facilitative role can therefore not be over-emphasised.

Trade facilitation has become an important issue on the multilateral, regional and Zimbabwean trade agendas, and with it, border management efficiency. Border management concerns the administration of borders. Border agencies are responsible for the processing of people and goods at points of entry and exit, as well as for the detection and regulation of people and goods attempting to cross borders illegally. Efficient border management requires the cooperation of all border management agencies and such cooperation can only be achieved if proper coordination mechanisms, legal framework and institutions are established.

This study explores how border agencies in Zimbabwe operate and cooperate in border management. The objectives of the study were to:

  • Identify agencies involved in border management in Zimbabwe;
  • Analyse the scope of their role/involvement in border management; and
  • Review domestic policy and legislation (statutes of these agencies) specifically to identify the legal provisions that facilitate cooperation among them.

Visit the Tralac Trade Law website to download the study.

Source: TRALAC

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by Mike Poverello

WCO/SACU Regional IT Connectivity Conference 2013

Delegates attending the WCO/SACU IT Connectivity Conference - May 2013

Delegates attending the WCO/SACU IT Connectivity Conference – May 2013

Representatives of the SACU member states recently met in Johannesburg to progress developments concerning IT Connectivity and Customs-to-Customs data exchange in the region. The session served as a follow up to the session held last year in February 2012 in Pretoria. The conference was convened by the SACU secretariat under the sponsorship of the Swedish International Development Agency (SIDA), and was once again pleased to have SP Sahu, senior technical expert from the World Customs Organisation, to facilitate the work session over 3 days. Representatives of UNCTAD ASYCUDA were also in attendance to observe developments. UNCTAD currently supports three (soon to be four) of the five SACU Customs administrations. The session provided an opportunity for delegates to progress this work as well as develop a terms of reference for an independent assessment of the two connectivity pilot projects that are currently being pursued between Botswana-Namibia and South Africa-Swaziland, respectively.

IT Connectivity serves as a catalyst for various customs-to-customs cooperation initiatives seeking to bring about a seamless end-to-end flow of information between point of departure and destination. Some examples include export/transit data exchange, approved economic operator, commercial fraud, eATA and at least 5 other key areas of customs mutual exchange.  The concept is driven out of the newly establish WCO model known as Globally Networked Customs (GNC). GNC was formally adopted by the WCO Council in June 2012 where a capacity building approach based on protocols, standards and guidelines (PSG) using utility blocks was recognised to provide the most realistic means to achieve efficiency gains, and a more effective way to manage the negotiation of international agreements between customs administrations.

There exist several pilot projects across the globe wherein customs agreements are being piloted under the GNC approach. Development of a Utility Block and supporting data clusters for interconnectivity within SACU and the broader Southern Africa sub-region already commenced at last year’s session. The concept gained sufficient traction and was soon adopted by both SACU and SADC  member states as the means to implementing IT connectivity within the respective regions.

A review of the Utility Block and data clusters was conducted to ensure alignment of customs data requirements across the member states. The resulting product now provides a standard ‘data set’ which members agree as the minimum data required to facilitate data exchange and advance risk management needs. It covers export and transit declaration requirements. Two important criteria exist for successful data exchange and data matching. The first being the availability of appropriate legal provision for two countries to exchange data. The second requires the use of an agreed unique identifier. The identifier is important for Customs as well as the trade community.

Delegates were also presented with current and future developments occurring at the WCO, in particular the on-going work being done to formalise standards for the “My Information Package” concept as well as the WCO Data Model, currently at version 3.3. Another interesting on-going development involves a unique Trader ID.  

Member states involved in respective pilot programmes are now preparing themselves for an up-coming evaluation, later this year.

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by Mike Poverello

Southern African Narcotic Trafficking Landscape

Drugroutemap

See what the CIA’s Factbook has to say about Southern African countries and their role in the international narcotics supply chain –

Zimbabwe A transit point for cannabis and South Asian heroin, mandrax, and methamphetamines en route to South Africa
Zambia A transshipment point for moderate amounts of methaqualone, small amounts of heroin, and cocaine bound for southern Africa and possibly Europe; a poorly developed financial infrastructure coupled with a government commitment to combating money laundering make it an unattractive venue for money launderers; major consumer of cannabis
South Africa A Transshipment center for heroin, hashish, and cocaine, as well as a major cultivator of marijuana in its own right; cocaine and heroin consumption on the rise; world’s largest market for illicit methaqualone, usually imported illegally from India through various east African countries, but increasingly producing its own synthetic drugs for domestic consumption; attractive venue for money launderers given the increasing level of organized criminal and narcotics activity in the region and the size of the South African economy
Mozambique Southern African transit point for South Asian hashish and heroin, and South American cocaine probably destined for the European and South African markets; producer of cannabis (for local consumption) and methaqualone (for export to South Africa); corruption and poor regulatory capability make the banking system vulnerable to money laundering, but the lack of a well-developed financial infrastructure limits the country’s utility as a money-laundering center
Angola Used as a transshipment point for cocaine destined for Western Europe and other African states, particularly South Africa
by Mike Poverello

Namibia – Weak Rand Plays Havoc With Trade Balance

south-african-rand-zar-bearishThe continued weakening of the Rand and an increase in the volume of imports has seen Namibia’s trade deficit widen to N$17 billion, the Namibia Statistics Agency (NSA) has said.

The country’s import bill jumped 24% in 2012 to N$59 billion widening the trade deficit to N$17 billion compared to N$11 billion in 2011. Despite a fall in the share of some of the major imports to the total import bill, the value of imports still increased to N$59 billion compared to N$48 billion in the previous year.

Major imports for 2012 included mineral fuels, mineral oils, vehicles, boilers and machinery. Fuel dominated the list of imports with a share of 13% up from 9% in the previous year. Vehicles were in second place with a share of 11% (compared to 12% in 2011) of total imports. Boilers, machinery and mechanical appliances occupied third place with 9% a slight decline from 10% in 2011.

The Statistics Agency said an 80% increase in the value of oil imports (at N$7.8 billion) can be explained by a 14% depreciation of the Namibia Dollar/Rand against the US$ in the period under review since the 2012 average price of oil in US dollars was almost the same as in 2011. In addition, an increase in the volume of imports especially ships, boats and floating structures that recorded the strongest increase of almost 2100%, also contributed to the widening deficits.

South Africa remains Namibia’s most important trading partner with combined trade between the two countries amounting to N$48.6 billion in 2012. However, the direction of trade between the two countries remain skewed with Namibia importing N$41.6 billion worth of goods from South Africa, while exporting goods worth only N$7 billion to South Africa.

Analysts say while a weaker local currency boosts earnings of companies that sell their goods overseas, it adds to import costs, making food and fuel more expensive. With a relatively low industrial base, and a saturation in the mining sector, Namibia’s exports only grew marginally to N$42 billion up from N$37 billion in 2011. This growth is too small to have a meaningful impact on the widening trade deficit.

In 2013, the construction of the multi-billion dollar Husab Project, the Grove Mall and Square, Strand Hotel, the container terminal at Walvis Bay, and the Neckartal Dam is likely to put further pressure on the import bill worsening Namibia’s trade deficit even further. An estimated 80% of capital goods for these projects will be imported. Source: The Economist (Namibia)

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by Mike Poverello

NRA/BURS – Customs Connectivity Passes Test

TKCThe first live demonstration of an end-to-end customs connectivity solution was successfully completed in Windhoek, Namibia on December 12, 2012. Customs Connectivity enables customs administrations from different countries to share information seamlessly and instantly across borders: reducing processing time and improving access to reliable, real-time trade statistics.

The demonstration was witnessed by the Commissioners of Botswana (BURS) and Namibia Customs (NRA), senior managers and operational teams. The demonstration involved moving information from an ASYCUDA++ entry in Botswana via the Cloud-based User Portal to an ASYCUDA++ entry in Namibia, and vice-versa from Namibia to Botswana. It demonstrated how clearing agents/traders would manage the flow of their information via the secure online User Portal.

The demonstration marked a “watershed moment” in turning Customs Connectivity into reality. The next steps for the pilot project include full system testing and documentation before end-user training commences. Full implementation is scheduled to take place during the first half of 2013.

Customs Connectivity offers countries in the region a historic opportunity to engage cutting-edge technology and modern tools to facilitate trade throughout Southern Africa, enhancing economic growth and promoting food security. The pilot project is being implemented by Botswana and Namibia, supported by the USAID Southern Africa Trade Hub. Source: SATH

Request – Perhaps some of the TKC clearing agents, NRA and BURS customs staff would like to comment on their experience thus far? 

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by Mike Poverello

Building hard and soft infrastructure to minimise regional costs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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by Mike Poverello

Special Missing Zones

Since the publication of the draft bill, there has been much comment on the advantages and disadvantages of the new Special Economic Zones (SEZ) policy and process in the country. Given the renewed emphasis in economic policy debates on industrial policy and regional integration in the wider Southern Africa context, the article “Special Missing Zones in South Africa’s Policy on Special Economic Zones“, published by Tralac, serves to add to the debate by introducing some hitherto neglected aspects pertinent to the debate on the subject.

A good companion to this article (and perhaps essential prior reading) is the CDE’s “Lessons for South Africa from international evidence and local experience” which I posted on 31 May 2012 (see link under related articles below). There has essentially been little movement on the subject, yet it is clear that South Africa is losing lucrative opportunities in the global warehousing and distribution business to its neighbours. Unless government acknowledges that it has to involve business in the creation of such SEZ’s, the white elephant syndrome which befell IDZs will no doubt plague the latest programme.

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by Mike Poverello

Regional IT inter-connectivity takes another step

Delegates from at least 20 African Customs Administrations met in Pretoria, South Africa between 13 and 15 August to advance developments towards a common framework and approach to IT inter-connectivity and information exchange in the region. Convened by the SADC secretariat in consultation with COMESA and Trademark Southern Africa (TMSA), the three day work session focussed on uniform acceptance of the WCO‘s Globally Networked Customs (GNC) methodology, regional awareness of customs developments in the Southern and East African region, as well as joint agreement on customs data to be exchanged between the member states.

Mauritius Revenue Authority (MRA) shared its experience with delegates on the launch of its Customs Enforcement Network (CEN). Kenya Revenue Authority will soon be sharing enforcement information with its MRA counterpart. At least 22 African countries are expected to link up with the CEN network over a period of time. Customs enforcement information is the second pillar of the WCO’s GNC information exchange methodology; the first pillar being Customs information exchange. The latter provides for a holistic approach to the dissemination of common customs data derived from supply chain exchanges, for example declaration information, cargo information, and AEO information to name but a few. This information is vital for trading countries to administer advance procedures and better validate the information being provided by the trade.

Rwanda Revenue Authority introduced it’s RADDex programme which is a web-based IT solution for the exchange of cargo manifest information between participating states in the East African Community (EAC) – see related article below.

SADC and COMESA are rallying their members to participate in the initiative. At the current juncture, various member states have expressed keen interest to participate. While the regional intention is the linking of all customs administration’s electronically, initial developments envisage bi-lateral exchanges between Customs administrations which are ready to engage. The importance of the adoption of the GNC methodology is to ensure that customs connectivity and information exchange is harmonised and consistent across the Southern and East African region irrespective of whether countries are ‘early adopters’ or not.

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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

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by Mike Poverello

Awarding the SKA

So what does the awarding of the Square Kilometre Array (SKA) and Customs have in common? Sweet blow all as far as I was concerned until a colleague of mine, Roux Raath, pointed out one of the criteria on which the award was made. Reading the actual report one realises this has more to do with the fact that six African countries will be involved and the cross border movements are foreseen to be complex in contrast to movements between Australia and NZ. Therefore, this has less to do with the South African Customs administration than the Southern African geographical environment. The report also refers to duty and tax structures and these issues should perhaps find a home with the DTI as customs does not dictate these. Nonetheless, the fact remains that certain issues have been raised and these should be considered when strategies are devised to support the SKA project.

The SKA Site Advisory Committee (SSAC) reviewed the various customs systems and duty rates, the excise tax regimes and tax rates, and related issues such as import and export processes that will impact the SKA over its lifetime. A wide range of issues was considered since the SKA involves a large multinational investment of funds, materials, and services, including the provision of scientific and technical equipment, and personnel in various remote locations.

The SSAC reviewed the issues presented by the two candidates, including details related to the six diverse South African member countries; cross-border coordination and logistical issues presented by the South African proposal; and the diverse customs, excise, and regulatory structures in the two candidate sites. The SSAC also considered the long-standing Australia–New Zealand Closer Economic Relationship Trade Agreement (ANZCERTA) free-trade and economic cooperation agreement (allowing for the free flow of goods, services, and people between the two countries) and the absence of overall free-trade agreements among the six members of the South African consortium. The SSAC also reviewed the customs, free-trade, economic, and business environments in Australia and New Zealand and considered the written confirmation from the Australian government that there will be no Goods and Services Tax (GST) payable by the SKA in Australia. On the factor of Customs & Excise, the SSAC awarded the following points for each of the contending consortia – 13.3 for ANZ and 6.7 for South Africa.

To read the full report, download here!

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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’.

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