Tag / World Bank

by Mike Poverello

WCO supports the launch of the Global NTFC Forum 2022

The World Customs Organization (WCO) has joined hands, once again, with partner Annex D+ organizations (GATF, ITC, OECD, UNECE, UNESCAP, WBG and WTO) in supporting the Global Forum 2022 for National Trade Facilitation Committees (NTFCs). The Forum is being held from 1 to 4 February 2022 in a virtual mode and led by the United Nations Conference on Trade and Development (UNCTAD). It has brought together more than 500 participants, around half of which are members of their NTFCs.

In the high-level opening session, the speakers agreed on the need to ensure well-functioning, holistic and dynamic NTFCs, with their critical role in facilitating trade especially during the COVID-19 pandemic, through collaborative arrangements amongst all relevant public and private sector stakeholders. Embracing digital tools, the e-commerce growth and the importance of MSMEs and women traders were also highlighted by the speakers.

In his video address, Dr. Kunio Mikuriya, the Secretary General of the WCO emphasized the importance of trade facilitation during the COVID-19 pandemic recovery phase. Through simplifying and standardizing border procedures and creating transparent and predictable conditions for trade, Customs administrations facilitate legitimate business that, in turn, increases economic growth and job opportunities.

Secretary General Mikuriya mentioned a survey carried out in 2021, where the WCO took stock of the situation in the area of NTFCs, including the challenges and opportunities observed during the COVID-19 pandemic. Many NTFCs have put their work on hold, due to the inability to meet in person. However, in some instances NTFCs played an important role in addressing facilitation priorities during the pandemic, and have benefited from the sense of urgency generated by the crisis.

Dr. Mikuriya emphasized the need to strengthen the partnership among all relevant government authorities for improving border agency cooperation, which is essential in emergency situations. He reiterated the need to foster the dialogue and collaboration with the business community and underscored the private sector contribution to digitization, to conducting the Time Release Studies and in advancing Authorized Economic Operator (AEO) programmes, while taking into consideration the specific challenges of MSMEs.

The importance of increased diversity and inclusion in trade facilitation reforms, including improving the conditions for women traders was also highlighted. The WCO supports this agenda through its Network for Gender Equality and Diversity, amongst others.

The WCO reiterated its commitment to the TFA agenda in developing and least developed country Members through the WCO Mercator Programme.

The NTFC Forum was made possible with the support of the United Kingdom’s Her Majesty Customs & Revenue (HMRC) through the HMRC-WCO-UNCTAD Trade Facilitation Capacity Building Programme, which brings together the WCO and UNCTAD in a partnership for TFA implementation.

The whole address of the Secretary General can be found here.

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by Mike Poverello

SARS hosts Single Government Authorised Economic Operator Workshop in collaboration with Border Management Agency (BMA)

Customs activities for this year are underpinned by the World Customs Organization’s (WCO) 2021 theme “Customs bolstering recovery, resilience and renewal for sustainable global supply chain”. The colossal task that lies ahead as nations look to reconstruct their global supply chain is one of the reasons that the WCO has advocated Authorised Economic Operator (AEO) programmes as a tool to promote reconstruction.  

SARS, in collaboration with the Border Management Agency (BMA), is leading the process  of creating  a Single Government  AEO (SGAEO) programme to ensure improved trade facilitation and supply chain security in South Africa, the Southern African region, the African continent and globally. The World Bank (WB) and WCO have agreed to assist SARS to create a SGAEO programme, through the WB Trade Facilitation Programme.

The agreement to conceptualise a SGAEO for South Africa culminated in agreement that SARS and the BMA would jointly host a workshop with all agencies involved in managing trade at the border. The WB and WCO have agreed to participate in the workshop on 2 March 2021. The workshop is intended to contextualise and set the scene for the creation of a SGAEO programme in South Africa and to allow for comparison of the various OGA risk management programmes for cross border trade with the SARS AEO programme.

International drivers for Single Government AEO programmes include the World Trade Organisation’s Trade Facilitation Agreement and the WCO’s SAFE Framework of Standards. South Africa’s scoring on the OECD’s Trade Facilitation Indicator is used as input into the World Bank’s (WB) Ease of Trading across Borders in its annual Doing Business Report.

For Customs Administrations, AEO programmes are vital tools for developing trust-based partnerships with economic operators who have high levels of commitment to compliance and supply chain security. Economic operators, on the other hand, are interested in the tangible benefits offered to participants, particularly, mutual recognition agreements (MRAs) with trading partners. 

While several countries have adopted different OGA (Other Government Agencies)AEO models, SARS’ preferred model is a Single Government AEO Programme with one certification process and benefits granted by all agencies.

Source: South African Revenue Service, Rae Vivier, 2 March 2021

by Mike Poverello

World Bank suspends ‘Doing Business’ rankings after fraud

The World Bank has suspended its Doing Business report, which ranks countries based on the costs of doing business. It is the latest crisis to beset the institution.

“A number of irregularities have been reported regarding changes to the data in the Doing Business 2018 and Doing Business 2020 reports,” the global institution said in a statement on August 27.

The institution said it had informed the authorities of the most affected countries, but did not name them. “We will act based on the findings and will retrospectively correct the data of countries that were most affected by the irregularities,” the statement added.

The Wall Street Journal reported that data on China, Azerbaijan, the United Arab Emirates and Saudi Arabia “appeared to have been inappropriately altered.”

If confirmed, the revised data could affect the rankings of the five countries. The latest report, for example, showed vast improvement among Middle Eastern economies with Saudi Arabia climbing 30 places.

The latest report, published last year, ranked Togo and Nigeria among the 10 countries that had shown the most improvement and collectively accounted for “one-fifth of all the reforms recorded worldwide.”

There are no reports that the scores of either country were tampered with.

In the report, only two Sub-Saharan economies, Mauritius and Rwanda, ranked among the top 50. Kenya, South Africa, Zambia, Botswana, and Togo ranked among the top 100 while South Sudan, Eritrea and Somalia ranked among the lowest globally.

The decision to suspend the rankings is also likely to reignite controversy around the annual report, particularly in the methodologies behind the rankings.

In the 17 years it has been published, the Doing Business reports have amassed “surprising influence over global regulatory policies,” researchers wrote in a paper published in 2019. The researchers found that the rankings strongly affect policy as governments make reforms to improve their ranking.

“Changes over time in the Doing Business rankings are not particularly meaningful. They largely reflect changes in methodology and sample—which the World Bank makes every year, without correcting earlier numbers—not changes in reality on the ground,” Researchers at the Center for Global Development wrote in February 2018.

In June, the Bretton Woods institution appointed Carmen Reinhart as its new chief economist. Reinhart’s two predecessors, Penelope Koujianou Goldberg and Paul Romer, resigned after less than two years on the job. Pinelope Goldberg quit in February, effective 1 March.

Romer quit in January 2018 after igniting a controversy around Chile’s ranking in the Ease of Doing Business Report, which he suggested may have been deliberately lowered under the presidency of left-leaning Michelle Bachelet.

The World Bank is also struggling to counter the fallout from the publication of an internal paper that looks at elite capture of foreign aid.

Source: The Africa Report, 28 August 2020

by Mike Poverello

Mozambique – conditions ideal for ‘Chinese model’ of Special Economic Zones

Maputo1Mozambique has the necessary conditions to successfully adopt the Chinese model of Special Economic Zones, which helped to boost the Chinese economy, according to researchers Fernanda Ilhéu and Hao Zhang.

In the study “The Role of Special Economic Zones in Developing African Countries and Chinese Foreign Direct Investment (refer to link below),” researchers from the Lisbon School of Economics and Management noted that over 35 years, the Special Economic Zones have had “a decisive role in the development of places like Shenzhen, Zhuhai, Xiamen, Shantou, Hainan and Shanghai, and that African countries can leverage this experience.

In 2006, the Forum on China-Africa Cooperation gave “significant priority” to creating up to 50 SEZs abroad, which are being implemented, with US$700 million invested by Chinese companies in 16 EEZ, according to information from China’s Trade Ministry.

Increasingly focused on business abroad, China needs raw materials and African markets to which to export its products, but can also benefit from shifting some of its industries to Africa, as the cost of Chinese labour increases.

The approach to Africa has involved through loans and financing for the construction of infrastructure, and “the development of African countries requires China’s increasing involvement,” including “collaborating in the development of SEZs,” the authors argue.

Regarding Portuguese-speaking countries, the average annual growth of trade between 2002 and 2012 totals 37 percent, turning China into the largest trading partner and largest export market for those countries.

The relationship has proved to be “dynamic in both directions,” they added, with hundreds of companies from Portuguese-speaking countries operating in China and Chinese investment in those countries of around US$30 billion, according to China’s Trade Ministry.

As for the SEZ, the two researchers focused their attention on the Mozambican Manga-Mungassa (Beira, Sofala province) SEZ, established in May 2012, under the management of China’s Dingsheng International Investment Company (Sogecoa Group), which has plans to invest close to US$500 million.

Nearing completion, the first phase includes the construction of warehouse units, followed by the “operational” phase, with construction of additional infrastructure such as hotels and housing, and finally the free industrial zone, where high tech units will be installed.

“In terms of knowledge transfer, Mozambique has made active steps in learning from the experience of Chinese SEZs and using this model to attract foreign investment,” they said.

In 2012 the Mozambican government created the Office for Economic Areas with Accelerated Development (Gazeda) that in addition to Manga-Mungassa, is responsible for the projects of the Belulane Industrial Park, the Locone and Minheuene Free Industrial Zones and the Crusse and Jamali integrated park.

On 6 May, 2014 the Mozambican government approved the establishment of the Mocuba SEZ, a sign of the “determination to create more conditions and to look for more opportunities and economic measures to create jobs and generate wealth,” in the country, the study said.

According to the authors, Mozambique has a strategic location, the ability to attract investment through the diaspora, as well as its model of economic growth and development in its favour, although there remain difficulties in infrastructure and technological development.

“The Chinese SEZ model can be successfully applied to the Manga-Mungassa area,” they concluded. Source: macauhub / MZ

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by Mike Poverello

Global Value Chains in the Current Trade Slowdown

WB-GVC Slow Down TradeReal growth in global trade has decelerated significantly since its sharp recovery in 2010. Year-on-year growth in global real trade decelerated from 13.3 percent at the end of the first quarter of 2010, to 9.9, 3.1, and 0.5 percent at the end of the first quarters of 2011, 2012, and 2013, respectively, while picking back up to 3.9 percent in the year leading up to the fourth quarter of 2013. This aggregate deceleration in global trade includes absolute declines in real trade for many product categories and regions. In the wake of the Great Trade Collapse of 2008–9, understanding of the behavior of trade in slowdowns has improved. Among the many explanations offered for the Great Trade Collapse, including explanations related to uncertainty, trade financing, and new protectionist measures by governments, there has been a significant focus on whether the emergence of global value chains (GVCs) in international trade, and their behavior, are a contributing factor in trade slowdowns.

For detailed analysis of the apparel/footwear, electronics, and motor vehicles and related parts industries, download the World Bank report. Source: World Bank

by Mike Poverello

South Africa falls in 2014 global logistics rankings

jll_year_of_the_distribution_center_wide_imageSouth Africa has been ranked number 34 out of 160 countries in the World Bank’s 2014 Logistics Performance Index (LPI), which is topped by Germany, with Somalia ranked lowest. Africa’s largest economy remained the continent’s highest placed LPI participant, but South Africa’s position was well off its 2012 ranking of 23 and its position of 28 in 2010.

In February, the World Bank argued in a separate report on South Africa that the country’s high logistics costs and price distortions were an impediment to export competitiveness. That report noted, for instance, that South Africa’s port tariffs on containers were 360% above the global average in 2012, while on bulk commodities they were 19% to 43% below the global average. Similar commodity biases existed in the area of rail freight.

But the new report, titled ‘Connecting to Compete 2014: Trade Logistics in the Global Economy’, still clustered South Africa as an “over-performing non-high-income” economy along with Malaysia (25), China (28), Thailand (35), Vietnam (48) and India (54).

The report draws on data arising from a survey of more than 1 000 logistics professionals and bases its LPI rankings on a number of trade dimensions, such as customs performance, infrastructure quality, and timeliness of shipments. Besides China, South Arica also performed above its ‘Brics’ counterparts of Brazil (65),Russia (90) and India.

Germany was followed in the top 10 by other developed economies, namely Netherlands, Belgium, the UK, Singapore,Sweden, Norway, Luxembourg, the US and Japan. Among low-income countries, Malawi, Kenya and Rwanda showed the highest performance.

The report warns that the gap between the countries that perform best and worst in trade logistics remains large, despite a slow convergence since 2007. The gap persists, the study asserts, because of the complexity of logistics-related reforms and investment in developing countries. This, despite strong recognition that poor supply-chain efficiency is the main barrier to trade integration.

However, senior transport economist and founder of the LPI project Jean-François Arvis stresses that a country cannot improve through developing infrastructure, while failing to address border management and other supply-chain issues.

Logistics performance is strongly associated with the reliability of supply chains and the predictability of service delivery for producers and exporters, the report notes, adding that supply chains are only as strong as their weakest links. They are also becoming more and more complex, often spanning many countries while remaining critical to national competitiveness.

“It’s difficult to get everything right. The projects are more complicated, with many stakeholders, and there is no more low-hanging fruit,” Arvis argues.

The report also finds that low-income, middle-income and high-income countries will also need to adopt different strategies to improve their standings in logistics performance. “Comprehensive reforms and long-term commitments from policymakers and private stakeholders will be essential. Here, the LPI provides a unique reference to better understand key trade logistics impediments worldwide.” Source: Engineering News

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by Mike Poverello

South Africa Economic Update – Focus on Export Competitiveness

WB-South Africa-Export CompetitivenessThe report, South Africa Economic Update 5: Focus on Export Competitiveness, examines the performance of South Africa’s export firms against that of peers in other emerging markets— and analyzes the challenges. It assesses South Africa’s economic prospects in the context of the global economic environment and prospects.

With this Economic Update, we hope to enrich the on-going debate on growing a sector critical for South Africa’s economic growth. As with previous editions, this report is intended not to be prescriptive but to offer evidence-based analysis that will help bring South Africa’s policymakers, researchers, and export stakeholders closer to finding innovative and sustainable ways to grow the sector. The report highlights opportunities for growth, particularly with Sub-Saharan Africa being the largest market for non-mineral exports. It also explores strategic directions that can ignite export growth and help South Africa realize its goals of creating jobs and reducing poverty and inequality.

The report identifies three areas that present opportunities to promote the competitiveness and spur the growth in South Africa’s export sector:

  • Boosting domestic competition would increase efficiency and productivity. By opening local markets to domestic and foreign entry, South Africa would enable new, more productive firms to enter and place downward pressure on high markups. This would lower input costs and tip incentives in favor of exporting by reducing excess returns in domestic markets. Competition would also stimulate investment in innovation and, over time, condition the market to ensure that firms entering competitive global markets have reached the productivity threshold to support their survival and growth.
  • Alleviating infrastructure bottlenecks, especially in power, and removing distortions in access to and pricing of trade logistics in rail, port, and information and communication technologies would reduce overall domestic prices and further enhance competitiveness. It would be especially beneficial for small and medium-size exporters and non-traditional export sectors, which these costs tend to hit harder.
  • Promoting deeper regional integration in goods and services within Africa would generate the right conditions for the emergence of Factory Southern Africa, a regional value chain that could feed into global production networks. South Africa could play a central role in such a chain, leveraging the scale of the regional market, exploiting sources of comparative advantage across Africa to reduce production costs, and providing other countries in the region a  platform for reaching global markets. Progress on all three fronts would help catapult South Africa toward faster-growing exports, allowing it to realize the higher, more inclusive, job-intensive growth articulated in the National Development Plan.

Source: World Bank

by Mike Poverello

Pravin Gordhan named Finance Minister of the Year

Pravin Gordhan - Finance Minister of the Year 2013 (Mail & Guardian)

Pravin Gordhan – Finance Minister of the Year 2013 (Mail & Guardian)

Finance Minister Pravin Gordhan (former chairperson of the World Customs Organisation) has been named the Finance Minister of the Year for 2013 in sub-Saharan Africa by the Emerging Markets website, the finance ministry said on Sunday.

The website’s citation stated that Gordhan, appointed in 2009 at the height of the economic crisis, had been praised by analysts, the ministry said in a statement.

This was because South Africa especially was more exposed than other emerging markets to dangers stemming from the eventual pullback of quantitative easing by the US’s Federal Reserve.

Emerging Markets provides news, analysis and commentary on economic policy, international economics and global financial markets, with a special focus on emerging markets.

In his acceptance speech in Washington DC, where he has been attending the annual meetings of the World Bank and the International Monetary Fund, Gordhan thanked Emerging Markets for its recognition of South Africa and its economic team.

‘We are terrible managers’
“Minister Gordhan was critical of the sudden change in the narrative about emerging markets, which up until the second quarter of this year were praised for managing their economies very well,” the ministry said.

“[Emerging markets contributed] more than 50% to global economic growth and for lifting large numbers of people above the poverty line.”

Gordhan said: “Three months later, we are apparently fragile and we are terrible managers of our economies. We the emerging markets are here to stay.

“We live in an interconnected world, and more importantly, we live in an interdependent world. There is no decoupling from you, the advanced economies, and there is no decoupling from us, the emerging markets.” Source: Mail & Guardian/Sapa

by Mike Poverello

Border Management in Southern Africa: Lessons with respect to Policy and Institutional Reforms

The folk at Tralac have provided some welcomed insight to the challenges and the pains in regard to ‘regionalisation’. No doubt readers in Member States will be familiar with these issues but powerless within themselves to do anything due to conflict with national imperatives or agendas. Much of this is obvious, especially the ‘buzzwords’ – globally networked customs, one stop border post, single window, cloud computing, and the plethora of WCO standards, guidelines and principles – yet, the devil always lies in the details. While the academics have walked-the-talk, it remains to be seen if the continent’s governments have the commitment to talk-the-walk!

Regional integration is a key element of the African strategy to deal with problems of underdevelopment, small markets, a fragmented continent and the absence of economies of scale. The agreements concluded to anchor such inter-state arrangements cover mainly trade in goods; meaning that trade administration focuses primarily on the physical movement of merchandise across borders. The services aspects of cross-border trade are neglected. And there are specific local needs such as the wide-spread extent of informal trading across borders.

Defragmenting Africa WBThis state of affairs calls for specific governance and policy reforms. Effective border procedures and the identification of non-tariff barriers will bring major cost benefits and unlock huge opportunities for cross-border trade in Africa. The costs of trading remain high, which prevents potential exporters from competing in global and regional markets. The cross-border production networks which are a salient feature of development in especially East Asia have yet to materialise in Africa.

Policy makers have started paying more attention to trade-discouraging non-tariff barriers, but why does the overall picture still show little progress? The 2012 World Bank publication De-Fragmenting Africa – Deepening Regional Trade Integration in Goods and Services shows that one aspect needs to be singled out in particular:  that trade facilitation measures have become a key instrument to create a better trading environment.

The main messages of this WB study are:

  • Effective regional integration is more than simply removing tariffs – it is about addressing on-the-ground constraints that paralyze the daily operations of ordinary producers and traders.
  • This calls for regulatory reform and, equally important, for capacity building among the institutions that are charged with enforcing the regulations.
  • The integration agenda must cover services as well as goods……services are critical, job-creating inputs into the competitive edge of almost all other activities.
  • Simultaneous action is required at both the supra-national and national levels. Regional communities can provide the framework for reform, for example, by bringing together regulators to define harmonised standards or to agree on mutual      recognition of the qualification of professionals……. but responsibility for implementation lies with each member country.

African governments are still reluctant to implement the reforms needed to address these issues. They are sensitive about loss of ‘sovereign policy space’ and are not keen to establish supra-national institutions. They are also opposed to relaxing immigration controls. The result is that border control functions have been exercised along traditional lines and not with sufficient emphasis on trade facilitation benefits. This is changing but specific technical and governance issues remain unresolved, despite the fact that the improved border management entails various technical aspects which are not politically sensitive.

The required reforms involve domestic as well as regional dimensions. Regional integration is a continental priority but implementation is compounded by legal and institutional uncertainties and burdens caused by overlapping membership of Regional Economic Communities (RECs). The monitoring of compliance remains a specific challenge. Continue reading →

by Mike Poverello

EAC – Top Regional Trading Block in Africa

Doing Business EAC 2013Improving customs efficiency can boost trade volumes and reduce the cost of doing business in the region, the Doing Business in the East Africa Community 2013 survey (Click hyperlink to view the report) has indicated.

The study conducted by World Bank (WB) and the International Finance Corporation showed that a one day reduction in inland travel times could lead to a 7 per cent increase in exports. The report also noted that easing access to finance, improving infrastructure and empowering the private sector are key in the region’s integration process.

“Transport efficiency and a favourable business environment have a greater marginal effect on exports as they boss access to foreign markets, especially in low income economies,” it indicated. “Improving logistical performance and facilitating trade may have a larger effect on regional trade, especially on exports, than tariff reduction.”

Also, economies with efficient business registration, fair tax policies and efficient transport have a higher entry rate of new firms and greater business density, meaning that they are essential to ensure strong firm productivity and macro-economic performance.

According to the report, lowering costs for business registration improves formal job opportunities as more new firms hire skilled workers. “This strengthens other sectors, including the education sector and legal systems,” said Chantal Umuraza, the director of Chamber of Industries. “Economies that rank high on the ease of doing business tend to combine efficient regulatory processes with strong legal institutions that protect property and investor rights,” she added.

According to the report, financial market infrastructure, including courts, creditor and insolvency laws, as well as credit and collateral registries, improves access to credit and boosts trade. It also noted that entrepreneurs in EAC face weak legal institutions and complex regulatory processes compared with global averages and those of the developed economies.

Despite instituting some reforms, the survey found that East African Community businesses still faced huge obstacles, while economies in other regions had improved business regulations. “As a result, EAC member states’ rating in this area has stagnated at around 117 over the past four years,” the report showed. According to the report, it requires only eight procedures and 20 days on average to start a business in the East African region.

EAC economies accounted for two of the 11 regulatory reforms implemented in sub-Saharan Africa to make it easier for entrepreneurs to start businesses, the survey said. Rwanda still has the most efficient process in the EAC to start a business and 8th globally out of 185 countries surveyed. It is followed by Burundi at 28th position, Tanzania at 113, Kenya at 126 and Uganda trails at 144.

In general, 3 of 5 EAC economies rank well below the regional average in all areas measured by the survey. Burundi eliminated four requirements to have company documents notarised, to register the new company with the commercial court and the department of taxation. As a result, it moved up 80 places in the global ranking on the ease of starting a business, from 108 to 28.

On the whole, the report indicated, the region’ fares better than other regional trading blocs on the continent on the ease of starting a business. It was ranked 84th, way above 104th position for the Southern African Development Community (SADC). The Common Market for Eastern and Southern Africa (Comesa) is at 110th position while the Economic Community of West African States (Ecowas) ranks 127th. Source: AllAfrica.com

by Mike Poverello

World Bank Mobilises Record Support for Africa

world-bank-logoThe World Bank Group committed a record US$14,7 billion in the 2013 fiscal year to support economic growth and better development prospects in Africa despite uncertain economic conditions in the rest of the global economy.

“The continent has shown remarkable resilience in the face of a global recession and continues to grow strongly,” said Makhtar Diop, World Bank Vice President for the Africa Region. “Africa is at the centre of the World Bank Group 2030 goals of ending extreme poverty and promoting shared prosperity, in an environmentally, socially, and fiscally sustainable manner.”

The World Bank approved US$8,25 billion in new lending for nearly 100 projects for the 2013 fiscal year. These commitments include a record US$8,2 billion in zero-interest credits and grants from the International Development Association (IDA), the World Bank’s fund for the poorest countries. This is the highest level of new IDA commitments by any region in the Bank’s history.

International Finance Corporation’s (division of the World Bank) total commitment volume in Sub-Saharan Africa, including mobilisation, grew to a record US$5,3 billion, 34% more than the year before. Similarly, IFC’s spending on Advisory Services programmes in the region increased to more than US$65 million, about 30% of IFC’s total. Supporting developmentally beneficial foreign direct investment into Sub-Saharan Africa is a priority for the bank in 2013.

by Mike Poverello

World Bank – Developing Countries Bear More Trade Costs

fair-trade-virtues-of-free-trade-image2A  new database developed jointly by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the World Bank has revealed that trade costs fall disproportionately on developing countries. This is despite the fact that the international economy has integrated considerably in recent decades.

Disclosing this in a statement issued yesterday, the World Bank  said the study noted that “although developing countries were becoming more integrated into the world trading system in an absolute sense, they are starting from a higher baseline and their relative position is deteriorating because the rest of the world is moving more quickly.”

The bank explained that the new Trade Costs database uses an innovative method to estimate trade costs in agriculture and manufactured goods, opening new analytical possibilities for policymakers and researchers interested in trade integration.

“According to the research, trade costs are influenced to varying degrees by distance and transport costs, tariff and non-tariff measures, and logistics. The new data, which cover the time period 1995-2010, stress the importance of supply chains and connectivity constraints in explaining the higher costs and lower levels of trade integration observed in developing countries.

“One of the key findings triggered by the database is that two areas amenable to policy interventions—maritime transport connectivity and logistics performance—are very important determinants of bilateral trade costs, with an effect comparable to that of geographical distance.”

Ravi Ratnayake, Director of ESCAP’s Trade and Investment Division, which partnered with the World Bank on the project, said, “Technological factors are responsible for a significant share of the differences in trade costs around the world. From a policy perspective, reforms in areas such as infrastructure, core trade-related services sectors, and private sector development can thus have significant benefits for countries in terms of lowering trade costs.”

The global database shows the pattern of trade costs across countries and through time by offering a comparison of pairs of countries, and an identification of those trade costs that are high. As such, the data set can be used to examine the policy factors and “natural” factors that contribute to the levels of trade costs observed around the world. One telling trend: for upper middle income countries, it is easier to trade with high income countries than among themselves. Source: Leadership (Nigeria)

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by Mike Poverello

World’s Best (and Worst) Economies

Global Competitiveness Report 2012-13According to the WEF, competitiveness reflects the level of productivity of a country, based on its institutions, policies and economic factors. In its study, the WEF groups the 144 countries it surveys into one of three economic categories. “Factor-driven” economies are the least developed and rely on low-skilled labor and natural resources. More developed countries are considered “efficiency-driven” economies because they turn to improving output. The most developed economies, which focus on improving technology and new product and idea development, are considered “innovative.”

To create the Global Competitiveness Index (GCI) score for each country, the WEF ranked more than 100 economic indicators divided into 12 broad categories, referred to as pillars, that quantify the extent to which a country is competitive. The economic indicators and pillars were then scored 1 to 7. To rank the countries, some economic measures were weighted more heavily than others, depending on how the economy was categorized.

Based on WEF’s Global Competitiveness Report, which ranks 144 countries that make up almost 99% of the world’s GDP, 24/7 Wall St. reviewed the economies with the highest and lowest Global Competitiveness Index scores. Data from the World Bank and the World Health Organization were used to provide additional information on some economies.

For a summary of the results, read – The World’s Best (and Worst) Economies – 24/7 Wall St.

For the full report, a PDF download (<500 pages) is available from: World Economic Forum

For a view on the impact for South Africa, read – Global South Africans

by Mike Poverello

Reform by Numbers – a reference work on Customs reform

The word ‘reform’ is a constant in the daily life of a customs officer. No customs administration among the 177 members of the World Customs Organization has not had a reform program in progress or planned. This is ultimately quite normal.A new World Bank publication “Reform by Numbers” will no doubt appeal to customs and tax reform experts and change agents.

It was written in the context of new and innovative policies for customs and tax administration reform. Eight chapters describe how measurement and various quantification techniques may be used to fight against corruption, improve cross-border celerity, boost revenue collection, and optimize the use of public resources. More than presenting ‘best practices’ and due to the association of academics and practitioners, the case studies explore the conditions under which measurement has been introduced and the effects on the administrative structure, and its relations with the political authority and the users. By analyzing the introduction of measurement to counter corruption and improve revenue collection in Cameroon, two chapters describe to which extent the professional culture has changed and what effects have been noted or not on the public accountability of fiscal administrations. Two other chapters present experiments of uses of quantification to develop risk analysis in Cameroon and Senegal.

By using mirror analysis on the one hand and data mining on the other hand, these two examples highlight the importance of automated customs clearance systems which collect daily extensive data on users, commodities flows and officials. One chapter develops the idea of measuring smuggling to improve the use of human and material resources in Algeria and nurture the questioning on the adaptation of a legal framework to the social context of populations living near borders. Finally, two examples of measurement policies, in France and in South Korea, enlighten the diversity of measurement, the specificities of developing countries and the convergences between developing and developed countries on common stakes such as trade facilitation and better use of public funds.

The “gaming effect” is well known in literature about performance measurement and contracts performance, because there is a risk of reduced performance where targets do not apply, which is detrimental to the overall reform. It is crucial to keep in mind that, by themselves, indicators “provide an incomplete and inaccurate picture” and therefore cannot wholly capture the reality on the ground. Measurement indicators must be carefully chosen to ensure that knowledge is being uncovered.

Measurement, for purposes of reform, should not be “copied and pasted” from one country to another. Due consideration must be given to the varying aims of the customs service and the specific political, social, economic, and administrative conditions in the country.

Measurement applied to experimentation is also about how donors, experts, and national administrations work together. On the one hand, national administrations in developing countries ask for technical assistance, standards, and expertise that are based on experiences of developing countries and use experts from such countries.These requests encourage the dissemination of such models. On the other hand, reforms of customs or tax administrations are represented as semi-failures in terms of the initial expected outcomes set by donors and politicians – usually the end of a reform is the time when donors and local administrations become aware of the gaps of their own representations of success.

While scientific and academic in approach, lets hope it means more than just miserable experimentation in target countries.

The book is available for free reading online – www.scribd.com or you can purchase from amazon.com.

by Mike Poverello

Customs Modernisation – positive impact on Doing Business in South Africa!

South Africa ranks 39th out of 185 countries surveyed in the latest International Finance Corporation (IFC)-World Bank ‘Doing Business’ report, which was published on Tuesday.Last year, South Africa ranked 35 out of 183 countries assessed.

The country is placed above Qatar and below Israel in the Doing Business 2013 report, which covers issues such as starting a business, dealing with construction permits, getting electricity, registering property, accessing credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Singapore remains at the top of the ease-of-doing-business ranking for the seventh consecutive year, followed by Hong Kong and New Zealand. Poland improved the most in making it easier to do business, by implementing four regulatory reforms in the past year.

South Africa led the pack in terms of improving in the ease of trading across borders through its customs modernisation programme, which reduced the time, cost and documents required for international trade. “We hope that through the streamlining of procedures, we will see the growth of commerce in the country,” said coauthor of the report Santiago Croci Downes.

The Doing Business 2013 report stated that improvements in South Africa have effects throughout Southern Africa. “Since overseas goods to and from Botswana, Lesotho, Swaziland and Zimbabwe transit through South Africa, traders in these economies are also enjoying the benefits,” it stated.

Another 21 economies also implemented reforms aimed at making it easier to trade across borders in the past year. Trading across borders remains the easiest in Singapore, while it is the most difficult in Uzbekistan.

Out of the 185 economies assessed in the 2013 report, South Africa ranked 53rd for starting a business, 39th for dealing with construction permits, 79th for registering property, 10th for protecting investors, 32nd for paying taxes, 82nd for enforcing contracts and 84th for resolving insolvency.

The country ranked low, at 150, for ease of access to electricity, while it tied at the top with the UK and Malaysia for ease of access to credit. Croci Downes added that it was still too early to tell whether the recent labour unrest in the mining and transport industries would have an impact on South Africa’s ranking or on foreign direct investment .

Meanwhile, the IFC and World Bank reported that of the 50 economies making the most improvement in business regulation for domestic firms since 2005, 17 were in sub-Saharan Africa.

From June 2011 to June 2012, 28 of 46 governments in sub-Saharan Africa implemented at least one regulatory reform making it easier to do business – a total of 44 reforms.

Mauritius and South Africa were the only African economies among the top 40 in the global ranking. World Bank global indicators and analysis director Augusto Lopez-Claros said Doing Business was about smart business regulations, not necessarily fewer regulations. “We are very encouraged that so many economies in Africa are among the 50 that have made the most improvement since 2005 as captured by the Doing Business indicators.”

IFC human resources director Oumar Seydi added that lower costs of business registrations encouraged entrepreneurship, while simpler business registrations translated to greater employment opportunities in the formal sector.

“Business reforms in Africa will continue to have a strong impact on geopolitical stability. We encourage governments to go beyond their rankings. Ranking does matter, and competition is important, but that is not all that counts. What truly matters is how reforms are positively impacting growing economies,” he said.

African economies that have improved the most since 2005 include Rwanda, Burkina Faso, Mali, Sierra Leone, Ghana, Burundi, Guinea-Bissau, Senegal, Angola, Mauritius, Madagascar, Mozambique, Côte d’Ivoire, Togo, Niger, Nigeria, and São Tomé and Príncipe. Source: http://www.polity.org.za

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